New research by the Chartered Institute of Personnel and Development (CIPD) has revealed that over a quarter of employers do not know if they will be expected to pay the new Apprenticeship Levy that is expected to commence in April 2017. Further, only a third of those employers who expect to pay the levy have calculated how much it will cost them each year.

Peter Cheese, Chief Executive of the CIPD, said:

'We share the Government’s ambition to increase the number and quality of apprenticeships in the UK. However, our research suggests while the levy will boost apprenticeship numbers among some employers, the majority of organisations, particularly SMEs, are unlikely to use levy funding to improve apprenticeship provision. Our research also finds that the levy could have damaging, unintended consequences.'

The new apprenticeship levy will commence in April 2017 at a rate of 0.5% of the employers’ paybill. To exclude smaller employers a £15,000 allowance can be claimed. This will mean that only employers with a pay bill in excess of £3 million will contribute to the levy. To keep the process as simple as possible the paybill will be based on total employee earnings subject to Class 1 secondary NICs.