April 2016 marks a change in the law that is designed to further encourage employers to take on more apprentices. Since 6 April 2016 employers no longer have to pay National Insurance contributions for apprentices under the age of 25 for earnings below £827 per week (£43,000 per year). It is thought that employers of young apprentices are set to save thousands of pounds in National Insurance contributions as a result of the recent change, and the Department for Business, Innovation and Skills estimates that employers will now save around £1000 a year when employing an apprentice aged under 25 and earning £16,000 per annum.
This is just one of many steps that the Government has taken or is expected to take in attempts to encourage more employers to offer more apprenticeships. By April 2017 the Government intends to establish the Institute of Apprenticeships; a new independent body led by employers that will ensure the quality of apprenticeships in England. In addition, the Government has also introduced a £10million fund for the purposes of boosting the number of degree apprenticeships available.
As part of this agenda, the Government has also recently published draft legislation introducing the Apprentice Levy from April 2017, which will be a 0.5% charge on employers’ pay bills in excess of £3m per tax year, which has the stated aim of raising £3bn to fund new apprenticeships and training schemes across the UK.
Apprenticeships are a growing priority of the current Government and are expected to become a more frequent feature in employers’ organisations in the coming years. If you are thinking of employing apprentices, one of our experienced employment lawyers will be more than happy to discuss this with you and the issues in employing young people generally.