Government to introduce apprenticeship tax on employers

Following the announcement of the introduction of an apprentice levy in the Chancellor’s 2015 budget, a report has now been released about the plans, raising concerns for those who employ apprentices in the beauty industry.

The Government is introducing an apprenticeship tax that will let employers choose and pay for the apprenticeship training they want, a model that is set up in over 50 other countries. It will only apply to larger employers.

According to the consultation report from the Department of Business Innovation & Skills, the main aim of the scheme is to encourage business owners to invest in skills and boost employer investment in training, which has been in a general decline for the past 20 years, it says.

“Reversing this decline in on-the-job training is vital if we’re going to boost our national productivity and become a truly high-skilled, high-wage economy,” says the report.

The Government wants to increase the quality and quantity of apprenticeships in England by putting minimum standards in place and putting apprenticeships on an equal legal footing with educational degrees. Through these changes, the department plans to deliver 3 million new apprenticeship starts in the next five years.

From April 2016 the Government will abolish employer National Insurance contributions for apprentices under the age of 25.

The levy provides an answer to the structural decline of employers investing in training, according to the report. It will be collected from larger employers, both public and private, in the UK, who will be able to spend the levy to support all of their post-16 apprenticeships, giving them direct control over the funding. It will be delivered through a voucher system. The report says: “Those employers that are committed to apprenticeship training will be able to get back more than they put in.”

Commenting on the concerns of employers in the beauty industry, Hilary Hall, chief executive of the National Hairdressers’ Federation, said: “At the moment there is a lot of detail around this proposal still missing, but we do know at the crux it’s aimed at larger companies. As the majority of hair and beauty salons are small businesses it looks unlikely this proposal will affect our industry. The NHF will be responding to this consultation and voicing the concerns of salon owners and for the security of future training in hair and beauty. If this is introduced employers will be discouraged from taking on new apprentices, and this would hinder growth in our industry.”