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CIH warns over apprenticeship levy
The Chartered Institute of Housing has today warned associations not to miss out on recouping cash from a new apprenticeship tax that will be introduced next year.
The levy, which is being introduced on 6 April 2017, will affect any employer whose pay bill is more than £3m a year and will force them to pay 0.5% of that bill towards the new scheme.
Housing associations are being advised by the Chartered Institute for Housing (CIH) to start preparing for the changes, which will give all employers an allowance of £15,000 a year towards training apprentices. A company with a pay bill of £5m, for example, would need to hand over £25,000 minus the £15,000 allowance, meaning a total bill of £10,000.
The government expects the cash generated nationally for all employers to reach £3bn by 2019/20, funding three million apprenticeships.
According to Inside Housing’s own research, the 30 biggest associations in terms of stock owned face an average annual payment of nearly £250,000 a year from April 2017, based on published 2015 accounts. That amounts to a pool of £7.4m, from which they would be able to recoup a total of £450,000.
Vanessa Howell, head of professional standards at CIH, urged housing organisations to prepare for the change now and “get clued up” on the new apprenticeships standards.
She said: “We are concerned that many housing organisations aren’t aware of this change and the reality is they must think about it now to make the most of the allowance they will be able to access from 1 May 2017. Otherwise they could be in a position where they are paying a substantial amount of money for the levy and not receive any benefit for it.
“Only by preparing will housing organisations be able to make the most of the new apprenticeship standards which are specific to roles in housing for the first time. We need fresh, new talent in housing and the new standards represent a great opportunity for organisations to upskill existing staff and bring in new, young talent and give them the training they need.
“Housing organisations must make sure they are aware of these changes and put a plan in place for how they use the money they will be contributing.”
The CIH gave the following key points for housing organisations to note:
- The levy must now be spent within 24 months of it entering the digital account, rather than the 18 months previously proposed.
- Apprenticeship frameworks will be phased out by 2020. As the housing/property management apprenticeship standards are now in place it is expected that the housing framework will be switched off during 2017.
- Individuals will be able to undertake an apprenticeship at the same or lower level than a qualification they already hold, if it allows them to acquire substantive new skills and the content of the training is materially different from any prior training or a previous apprenticeship. Further guidance is to be provided on how this requirement can be met.
- Organisations in a group structure will only have one £15,000 allowance and must decide at the beginning of the tax year how this will be distributed across the group. Alternatively, the group can pool the levy into one digital account by registering to have their PAYE schemes linked to a single digital account.
- Employers who are also successful training providers can register to become a provider of apprenticeship training. Specific guidance is provided.
- Employers who do not pay the levy and employers who have exhausted their levy funding are eligible for the co-funding model, where the employer contributes 10% and the government 90%.
- Where apprentices are aged between 16 and 18 or between 19 and 24 – and have previously been in care or who have a Local Authority Education, Health and Care plan – the government will make an additional payment of £1,000 to the employer and £1,000 to the training provider.
