Chancellor George Osborne has given more details of the apprenticeship levy first announced in the Budget in today’s autumn statement and spending review, saying it will be set at 0.5% of an employer’s payroll bill
In addition, there will be a £15,000 allowance for each employer which can be used to offset the levy, with Osborne saying this meant that 98% of employers would not be affected by the new charge.
The levy will be paid through the PAYE system by employers.
The Institute of Directors criticised the levy saying it was equivalent to a tax on employers. Simon Walker, director general, said: ‘The major business tax announcement of this Autumn Statement was the Apprenticeship Levy, which can only be described as a new payroll tax.
‘At 0.5% of payroll it will be a big new cost for many companies, including medium-sized ones. We are very concerned by the government’s assumption that a quarter of the money collected will be spent on just administering the levy. Firms have been promised they will get back more than they put in, but it’s not clear how this will happen if so much is being lost in bureaucracy.’
Osborne said the levy would raise £3bn a year and would be used to fund three million apprentices by 2020, up from two million currently.