The Autumn Statement included more details of the proposed apprenticeship levy. This is now planned to be introduced in April 2017 and will impose a levy on larger employers at a rate of 0.5% of the employer’s payroll, collected through the PAYE system. The levy will be focussed on larger employers, though a proposed £15,000 allowance will be available against the levy payable, effectively restricting the levy to those employers with a payroll in excess of £3m.

By reason of the allowance, the government considers that the levy will only be payable by less than 2% of UK employers. However, it is projected that the levy will raise a significant amount (£3 billion per annum by 2019-20), meaning that the levy is likely to constitute a significant burden on those 2% of UK employers subject to the levy.

While the objectives of the levy are positive and to be supported, it will be difficult for large UK-based businesses to consider the apprenticeship levy as any more than a further payroll tax with a direct impact on after-tax profitability.