The news that up to 25% of an apprenticeship account can be transferred to other businesses, if it is not planned to be used, could provide a very welcome boost to tackling the skills gap in the hospitality industry.
The struggle to recruit and retain staff within the sector is not a new problem, but is anticipated to get worse if the number of unskilled European workers entering the UK to work falls.
Many operators have significantly increased the number of apprenticeships they offer in a bid to improve the bottom line. Indeed, the BBPA has reported that the number of apprenticeship starts in hospitality and catering for the top levy payers has risen 5% in the last year – with 165,000 people overall starting apprenticeships in the sector in the last 5 years.
Apprenticeships can help fill labour gaps and upskill workers – with some progressing into management roles – leading to better staff retention and reduced recruitment costs.
The apprenticeship levy was imposed from April 2017 on businesses with an annual pay bill of more than £3million, with funds being credited to an account for use to train apprentices. Employers who fall under the threshold to pay the levy only have to pay 10% of training costs for apprentices, with the Government paying 90%.
How long do you have to spend your training levy funds?
Funds in your training account will expire after 24 months. For example, funds paid in September 2017 will expire in September 2019 if you haven’t used them to pay a training provider before then. When you pay a training provider the oldest funds are taken first.
How can you use extra funds in your training account?
If you are in a group of companies you can set up a single shared apprenticeship account and pool your funds so that they can be used where most appropriate within the group.
Transfer to another employer
From April 2018 levy-paying employers were also allowed to transfer funds to other employers through the apprenticeship service. A transfer of funds can be made to any employer including small employers and those in your supply chain. For example, you could transfer funds to a microbrewery supplier to train a new brewer. This means that you will be assisting other employers in the industry and at the same time will not lose the apprenticeship levy that you have already been obliged to pay.
Initially employers were able to transfer 10% of the annual value of their apprenticeship account to another employer. However, from April 2019 this rises to 25%. This is a valuable sum of money which the industry is encouraging employers to consider transferring to other employers rather than losing it.
There are conditions around the transfer:
- You will have to agree the individual apprenticeship that will be funded by your transfer with the employer who is receiving the funds.
- The receiving employer will only be able to use the funds to pay for training and assessment for apprenticeship standards and not for apprenticeship frameworks.
Find out more about how to transfer unused apprenticeship funds see Government guidance
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.