The purpose of the new scheme is to help fund apprenticeships and “invest in Britain’s future”.
What is the Apprenticeship Levy?
The Apprenticeship Levy is a duty that employers in large companies will be required to pay to help subsidise apprenticeships offered throughout the UK.
Large companies will pay the levy at a rate of 0.5% - it seeks to raise £3bn and create three million apprenticeship places by 2020.
Only employers who an annual payroll bill in excess of £3 million will pay the levy. Businesses below this level will be exempt.
How will the Apprentice Levy affect Umbrella contractors?
The cost of the Apprenticeship Levy will undoubtedly filter down to freelance workers. Contractors operating through an umbrella company can expect to see their administration charges/margins increase from April 2017.
This is likely to be an extra burden for Umbrella contractors, many of whom have already had to absorb losses associated with the removal of Travel and Subsistence claims via legislation that was implemented in April 2016.
While the principle of the Apprentice Levy has strong grounds, many organisations, including the CBI, are questioning the viability of the system and are imploring the Government to liaise/collaborate with businesses.
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Disclaimer: The above information does not constitute professional advice, only general information.