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2015 Autumn Statement: £3 billion to be raised by new apprenticeship levy

26 Nov 2015

From 2017, a new apprenticeship levy will be introduced at a rate of 0.5% on company wage bills, raising an estimated £3 billion a year.

Confirming the measure in the Autumn Statement, Chancellor George Osborne said the levy would be used to finance three million apprenticeships.

He also revealed that each employer will receive an allowance of £15,000 to offset against their levy payment.

The new charge, which will be paid through PAYE, is intended to ensure that larger companies take responsibility for the costs of training employees.

Provisions for apprenticeships spending will also be protected within the Government’s departmental spending budgets.

However, business groups have labelled the levy a ‘payroll tax’.

The Confederation of British Industry (CBI) reported that the scheme is merely an additional tax that would affect many small companies.

Furthermore, the Institute of Directors (IoD) stated that the levy would be a sizeable cost for firms.

98% of employers are expected to be exempt from the new apprenticeship levy: only those businesses with a wage bill in excess of £3 million will have to pay.

Commenting on the plans, Chancellor George Osborne said: ‘It’s a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy’.