Training that isn’t taxing: the Apprenticeship Levy opportunity by Sponsor Barclays

The Apprenticeship Levy: a new tax or an opportunity to find and nurture talent? For professional services firms, the consideration will be whether this is an operational burden or a chance to broaden their training programmes for future prosperity.


Since the Levy came into force in England in April 2017, all employers with a pay bill exceeding £3m a year (on all earnings that are liable to Class 1 NICs) must now invest 0.5% of that figure in apprenticeships. However, as a sweetener, the scheme comes with a £15,000 offset allowance every tax year, so some firms will effectively pay nothing and receive funding for training.


Use it or lose it


The scheme funding for firms is managed through the Digital Apprenticeship Service online account, with the Levy calculated, reported and paid on a monthly basis to HMRC through the PAYE process (alongside tax and NICs). This money, paid into the account by firms, can then be spent on any qualifying apprenticeship training. But with this money having a 24-month shelf-life, firms are forced to ‘use it or lose it’.


However, there is a rapidly growing roster of official apprenticeship schemes (over 200) covering a wide range of sectors to choose from – although, naturally, there are rules about how the Levy funding can be spent:


  • It must be spent on apprenticeship training (not apprentice salaries)
  • Apprenticeships must be real jobs, lasting for a full year (or more), with 20% of time spent on training and including a programme of learning measured against an agreed standard
  • Training must be delivered by a registered training provider, with apprentices assessed by a registered accreditor
  • Apprenticeships can be at any level (from basic to postgraduate level), for employees of any age, and at any career stage
  • Apprenticeships are governed by standards (usually employer-led).

Accounting for success


The Government has a target to reach three million new apprenticeships by 2020. It also wants to improve training quality, arguing that the new regime will form the bedrock of a new and sustainable workforce. This will not only bridge the UK-wide skills gap that is affecting many industries, but also reach out to a broader cross-section of people and drive true diversity in the workplace.


Upgrading not deleting


The market has traditionally been focused on level two and three apprenticeships – equivalent to GCSE and A-Level standards respectively – in sectors such as construction and hospitality. And while the Government is keen to maintain this, the scheme is now establishing new apprenticeships in areas such as accounting and cyber. So the levy now has more breadth of coverage and flexibility and the new financial dynamics of the Levy are intended to drive more employers towards the higher levels, pitched at graduates and beyond.


And the breadth of scope in the new apprenticeships for businesses that may, for example, be considering the return they get from their graduate schemes, holds genuine possibilities. Levy funds can be used to create learning programmes to fit the outcomes that businesses had been seeking through existing executive education programmes.


If cost has been an issue with these older schemes, within the Levy framework, companies can submit claim backs for each level of qualification. The higher levels (up to seven) attract up to £29,000.


Consider the full talent lifecycle


The Levy represents an opportunity.


Perhaps the traditional graduate programme could in part be dissolved into the apprenticeship scheme. Employers could use the Levy to fund degrees for their apprentices in order to give them an alternative route to qualifications whilst simultaneously providing them with work experience in the business world.


Interestingly, the Levy is effectively creating a new market where a number of business schools and universities are launching apprenticeships to meet professional needs. Programme flexibility also allows firms to build or even sell their own accredited courses. Having more control over content than in general education ensures that companies have training resources that suit their needs. And high-flyers who are funded and supported throughout their development are more likely to stay on-board.


A fresh approach


The view that the apprenticeships can create advantage is shared by Mike Thompson, Head of Early Careers at Barclays. Thompson, a member of the Government’s apprenticeship delivery panel representing the financial services sector, has helped drive Barclays’ own approach as part of its quest for employee diversity.


Indeed, with the Apprenticeship Levy, Barclays has been able to move away from the restrictions of the old scheme (it was, for example, only available to the 16 to 24 age group). The bank had acknowledged some time ago that its employee demographics did not represent its customers and it needed people with more and varied life skills. The flexibility of the new apprenticeship allows it to consider anyone of any age, at any level. “It makes a huge difference to us,” notes Thompson.


Strength through diversity


The Levy has certainly helped Barclays to tap into a rich, underutilised vein of talent. With employment among the over 50s rising, for example, Barclays launched a tailored recruitment programme. Using the advantages of the Levy, it is bringing valuable skills – both professional and personal – back into the workplace.


Even with its diversity count heading “in the right direction”, Thompson says that Barclays is aiming higher on diversity, and has introduced a pilot ‘Able to Enable’ internship to help people with mental health issues back into the workplace.


By not dodging the difficult issues and by leveraging the Levy, Thomson says the bank has on-boarded some highly intelligent and motivated employees who might otherwise remain unemployed.


Employee retention and progress are key goals too. Thompson sees the wider apprenticeship scheme as an enabler for reskilling in the workplace. “We have tried as much as possible to innovate and use the freedom that the Government has given us to introduce and keep hold of talent,” he reports. Furthermore, by working through the Levy with leading and diverse providers such as Manchester Metropolitan University, The Chartered Institute of Marketing, and Google, Barclays is assuring a whole new set of skills for its employees and, ultimately, putting itself in the strongest of competitive positions. “It has been a huge win for us,” says Thompson.


Working on it


There is work still to be done to change the perception of apprenticeships as one of low level attainment, Thompson admits. While it is a job for schools to introduce the idea to students, he says, the more that professional businesses espouse the idea, the more credibility it will gain, not least with smaller firms who must come on board for it to succeed in the longer term.


So, the Levy can help pave the way. As university fees remain an issue for many students, employers offering a formal career path to them for free looks very attractive indeed. While new apprenticeships don’t signal the end for traditional graduate schemes, they will continue to secure strong talent that might otherwise fall under the radar and that is to everyone’s benefit


Key takeaways

  • All employers with a pay bill exceeding £3m a year must invest 0.5% in apprenticeships
  • They will receive a £15,000 offset allowance every tax year – valid for 24 months – which can be spent on any qualifying apprenticeship training
  • The Levy offers firms more flexible training opportunities and could help businesses to invest more in complex skills acquisition
  • By addressing the difficult issues, the Levy can help businesses to on-board talented and experienced individuals who might otherwise remain unemployed
  • But to ensure long-term success, it will be important to transform traditional perceptions of apprenticeships as a ‘low level of attainment’.


To find out how we can help your business contact:

Paul Jarrett, Relationship Director

MOBILE: 07917 503485 | EMAIL:



The views expressed in this article are the views of the author alone and do not necessarily reflect the views of the Barclays Bank PLC Group nor should they be taken as statements of policy or intent of the Barclays Bank PLC Group. The Barclays Bank PLC Group takes no responsibility for the veracity of information contained in the third party guides or articles and no warranties or undertakings of any kind, whether express or implied, regarding the accuracy or completeness of the information given. The Barclays Bank PLC Group takes no liability for the impact of any decisions made based on information contained and views expressed. Barclays is a trading name of Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential

Regulation Authority (Financial Services Register No 122702). Registered in England. Registered number is 1026167 with registered office at 1 Churchill Place, London E14 5HP. November 2017.

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