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The apprenticeship levy and co-investment: Why it’s important to small and medium businesses

The £15,000 apprenticeship levy allowance effectively results in businesses with an annual wages bill of less than £3 million being outside the scope of the apprenticeship levy charge.

You’d be forgiven for not losing too much sleep when the levy came into effect from 6 April 2017. However, it’s not the levy itself but the new co-investment for funding apprentice training that businesses need to be thinking about.

From May 2017, businesses and charities that do not have to pay the apprenticeship levy can seek assistance from the Government to fund apprenticeships they offer employees under ‘co-investment’. Co-investment allows the employer to access funding from the Government to pay for 90% of the training costs, leaving the employer to fund just 10% of the training cost.

There is a wide variety of industries and training programs that the co-investment fund can be used in conjunction with. Given the spiralling costs of university education, apprenticeships are increasingly becoming a more desirable alternative for potential employees than ever before, and with co-investment the incentive is now there for the employer to offer them.

When you consider just how expensive training can be for employers, particularly small and medium employers, to be able to put employees through a professional qualification at only 10% of the cost makes co-investment something you really need to be considering.

To put this into context, the funding band for an Association of Taxation Technician (ATT) apprentice is a maximum cost of £9,000, meaning an employer could now offer an employee the opportunity to study their ATT qualification costing them of no more than £900. I started studying for my ATT qualification in 2009 and even then the cost for my employer to put me through the qualification was £5,000. So to be able to provide this training to an employee today at a maximum cost of £900, represents a massive saving for small and medium employers.

Not only does this represent a significant financial saving to employers, but it should also help to increase staff retention as employees are more likely to stay with an employer that invests in them and staying with their current employer allows them to study towards a professional qualification.

Should you have any further questions on the apprenticeship levy and co-investment, please contact myself at or any of our employment tax team.

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