Tuesday, 30 August 2016

Is it time for an apprenticeship levy in Jersey?

Is it time for an apprenticeship levy?

One of the great problems in Jersey is getting some businesses to take on and train apprentices.

I am sure that one of the reason applications are made to bring staff in from the UK and elsewhere is because it is easier and quicker to buy the expertise of someone ready trained than to train someone up. An apprenticeship levy would go some way towards providing a positive incentive for training home-grown staff as those who did not do so would be have to pay for that privilege.

Another advantage of such a levy is that it would shift the burden - as with the waste charge - to companies rather than taxpayers. It would necessarily not apply to small businesses who might struggle to afford it, but certainly could apply to businesses over a particular threshold. The UK one is, in my view, probably over-generous, but even that would be a step on the right way.

Basically in the UK (and why some businesses vehemently opposed its introduction), it ensured that businesses who took on apprentices were not disadvantaged, and those that did not had to pay more to support those that did.

Here are some notes from the UK on how it works:

In April 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers. The apprenticeship levy requires all employers operating in the UK, with a pay bill over £3 million each year, to make an investment in apprenticeships. You can benefit from this investment by training apprentices.

You will need to pay the apprenticeship levy if you are an employer, in any sector, with a pay bill of more than £3 million each year. For the purposes of the levy, an ‘employer’ is someone who is a secondary contributor, with liability to pay Class 1 secondary National Insurance Contributions (NICs) for their employees. The levy will be charged at a rate of 0.5% of your annual pay bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay. This means you will only pay the levy if your pay bill exceeds £3 million in a given year.

Earnings include any remuneration or profit coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on. We will not charge the levy on other payments such as benefits in kind, subject to Class 1A NICs.

You will pay the levy on your entire pay bill at a rate of 0.5%. However, you will have a levy allowance to offset against this. The levy allowance is worth £15,000 for each tax year. This means the levy is only payable on pay bills over £3 million (because 0.5% x £3 million = £15,000).


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