04/04/2017: UK Music is urging companies within the music industry to make sure they are fully prepared for the new apprenticeship levy which kicks in this week, after research showed huge numbers of firms were unaware of it.
Businesses with an annual wage bill of £3million and more will be subject to a mandatory tax of 0.5% of the total payroll, with the money going towards the training costs for apprentices. Even those small and medium enterprise (SME) companies which are below the threshold to pay will still be able to use the money to pay 90% of their training costs.
A survey of firms by recruitment company Manpower found almost two thirds (63%) knew little or nothing about the system which is designed to boost the number of apprenticeships in the UK. It also found that even many of the companies who will be forced to pay did not know about their liabilities.
The levy takes effect on April 6, although the first payments will not be made until May, with the Treasury estimating it will raise nearly £3 billion annually. The government aims to create three million new placements by 2020.
UK Music has been a strong supporter of apprenticeships through its Skills Academy to give young people a way into the music industry, broaden their skills and increase diversity. It has enabled 70 opportunities to be created, allowing people to earn while they learn while working in roles within venues, recording studios, collecting societies and record labels.
UK Music chief executive Jo Dipple said: “For an industry new to the concept of apprenticeships, music has made a fast conversion. Teaching keen, diverse young people about a fast-changing business while working, and learning, as an apprentice is a win for both sides. Youngsters end up in the industry they love. Businesses profit from the renewed energy and talent which is brought into the workforce.
“Getting the new system to work will offer huge advantages to the economy as we leave the EU. It needs a commitment from Government to guide and explain to employers, especially the non-levy-paying SMEs, how they can benefit. The proof of the effectiveness will be when we see it in action. If the placement of young people in new jobs is lower than the music industry achieved without it, the levy must be seen to fail the music sector. If the new apprenticeship quango, The Institute for Apprenticeships, becomes a wasteful beast – one the Tories feared during their ‘bonfire’ phase – the levy will have failed the new qualifying tax-paying companies. Only time will tell. We will review the impact of the levy on our sector in a year’s time.”
– Firms whose wage bill is more than £3 million will pay a mandatory tax of 0.5% of their payroll. The cost is further reduced by a £15,000 tax allowance. A firm with a £5 million wage bill will pay a levy of £10,000. The scheme begins in April with first payments (through PAYE) in May.
– Companies which pay the levy can claim back the money they have paid in, in the form of digital vouchers to put towards training costs. The Government will then add a 10% top-up to those contributions – so for every £1 contributed, companies can spend £1.10 on training.
– Those which do not pay can still take advantage. They can claim 90% of training costs but must pay the remaining 10%
– The levy covers only training costs. Firms must pay the wages of the apprentice.