Manufacturers and technology companies are gearing up to deal with a new Apprenticeship Levy from April 2017, adding to their existing burden of red tape, warns a Top 40 accountant.

The manufacturing, technology and Innovation (MTI) sector recruits a sizeable number of trainees each year, and from next year larger employers in the sector will have to contribute to a new Levy fund to be distributed to employers recruiting new apprentices.

Bishop Fleming warns that MTI companies need to prepare for the change, as the Apprenticeship Levy will impose a 0.5% tax on any firm with an annual payroll bill of over £3m. It will be collected through the payroll system.

The Levy comes on top of the new National Living Wage which started in April this year.

As a creation of the previous Chancellor, George Osborne, the Levy is being heralded as a way to boost the number of apprentices in the UK, without it costing HM Treasury any more money. The government hopes the Levy will raise £3bn a year to help fund 3 million apprenticeships by 2020.

Although larger employers will have to provide the money, any employer, regardless of size, will be able to access the pooled funds to recruit new trainees.

Bishop Fleming’s MTI partner, Nigel Warren, said: “Small and emerging companies in the MTI sector will benefit from the new resource without having to contribute anything, although the danger will be that any existing apprenticeship schemes in place – with possibly more flexible conditions – will be usurped by the new regime, which could be detrimental to the sector.”

Nigel added: “This new tax is a further burden for larger employers in the sector. Whilst smaller employers will benefit from being able to fund new apprentices, larger firms are being saddled with paying the bill. Government initiatives introduced on the cheap like this are no substitute for real fiscal stimulus for the MTI sector, which I hope to see in the November Autumn Statement.”

Mr Warren remarked: “The recent vote to leave the EU was a clarion call to our manufacturers in the South West to be more productive and export more, so any help the government can provide in this regard will be really welcome.”

Bishop Fleming has already received a large number of enquiries about the new Apprenticeship Levy and the firm expects it to generate a good take up from smaller firms seeking to recruit.


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