Apprenticeship Levy 2017 and Solicitor Apprentices

14 October 2017

From 6 April 2017, all employers whose pay bills total over £3 million each year will be required to make an investment in apprenticeships in the form of the Apprenticeship Levy.

The levy is calculated at 0.5% of the annual pay bill, less an allowance of £15,000 per year and is payable to HMRC though the PAYE system.  Both the levy and the allowance are calculated on a monthly basis and any unused allowance can be carried forward.

Only larger legal practices are likely to be required to pay the levy.  However, the pay bill of ‘connected employers’ is aggregated (i.e. group companies are only entitled to one £15,000 allowance, split between them as they wish), which could impact on smaller practices in groups or networks, depending on their corporate/tax structure.

The changes are part of a package of measures which are being introduced by the Government to increase the quality and quantity of apprenticeships, with an aim of achieving 3 million apprenticeships by 2020.

Apprenticeship standards have been developed in each sector by groups of employers called ‘Trailblazers’.  In the legal sector, this includes various city firms and regional heavy weights, as well as the SRA, the Law Society and CILEx.  Although it will be necessary to register an apprentice solicitor with the Skills Funding Agency at the start of the apprenticeship, it is only necessary to register with the SRA when they are ready to apply to be admitted as a solicitor, which will include satisfying the SRA as to their character and suitability.  Assessment is through examination in an assessment centre and a work-based assessment, as well as a standardised practical legal exam during the last six months of the apprenticeship.

Changes are also being introduced to apprenticeship funding from 1 May 2017, which will apply to all employers, regardless of whether the employer is required to pay the levy, although those paying it clearly have more impetus to ensure they access funding for training and assessment for apprentices.  Those paying the levy will access funds via a new digital apprenticeship service account, while those who are not required to pay it will not be required to set up and use an account until 2018 at the earliest, and will instead be required to contribute towards the cost of the apprentice’s training in a ‘co-investment’.

All employers will be able to use the digital apprenticeship service from May 2017 for information about the apprenticeship framework/standard, training providers, assessment organisations and post apprenticeship vacancies.

The terms and conditions of the current apprenticeship programme will continue to apply to apprentices whose programme started before 1 May 2017, so for apprenticeships due to commence around May 2017, it may be worthwhile assessing the comparative merits of the current and new programmes (e.g. financial and administrative ease) and bringing forward or deferring slightly where possible.

Action: refer to the Apprenticeship Levy: how it will work (August 2016) and other information on the website.  The SRA website includes information about the ‘Trailblazer Solicitor Apprenticeship’ and the ‘Apprenticeship Standard for a Solicitor’ is also available on the website.