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The Effect of the 2017 Apprenticeship Levy On the Recruitment Industry

31-03-2017

From the 6th of April 2017 onwards, all businesses in the UK will be affected by the new apprenticeship levy. The apprenticeship levy is the minimum investment that will be required of businesses for taking on apprentices and training current employees.

Here are some need to know facts about the apprenticeship levy:
- The levy will be set at 0.5%
- It will be in effect from April 6th 2017
- Only companies with payroll in excess of £3 million will be required to pay, due to a £15,000 allowance for all companies
- The levy will be paid directly to HMRC, based on PAYE RTI (Real-Time-Info)
- In order to fund apprenticeships within their own business, companies will be able to claim back their paid levy. This will contribute to the government target of 3 million new apprentices by 2020.

The direct effect the apprenticeship levy will have on the recruitment industry will be slightly different to that of other sectors, which is due to the nature of the business they conduct. It will be difficult for recruitment companies to fulfil the government’s requirement of a 1 year minimum in training for employees, as the large majority of agency workers are only on temporary contracts, and are often with agencies for roughly 8-10 weeks. They tend to move into permanent roles with the companies they had been working for via the recruitment company.

It is because of this that recruitment companies must search for alternative methods to face the challenges that the levy will present. Government predictions are that only 2% of employers will have to pay the levy, however for recruitment companies that statistic is more likely to be considerably increased to 15%.

The BIS (department for Business, Innovation and Skills) has been in close talks with recruitment companies across the UK, and are working towards a method that will truly support the government intention that the Levy should be “fair to all”. The BIS is aware of the contrast in impact that the apprenticeship levy will have on the recruitment sector in comparison to other businesses and has been steadily releasing information (last update 16th March – Chancellors Budget) that will help recruitment companies prepare for the Levy.

Industria are working closely with all our client partners to ensure they are kept fully up to date with regards to with the introduction of the Levy.

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