The Apprenticeship Levy – What does this mean for recruitment companies?

Posted on: November 10th, 2016

In 2015, the Government announced plans to introduce an Apprenticeship Levy as part of their drive to train 3 million new apprentices by 2020. Set to come into force in April next year, what does this mean for recruitment companies with temporary workers on their books?

Employers with an annual wage bill of more than £3 million will have to pay 0.5% of the total as a Levy. Each employer will receive an allowance of £15,000 per year to offset against the Levy payment, which will mean that employers with a pay bill of less than £3million will not have to pay the Levy at all. It will be down to employers to determine their eligibility to pay and to notify HMRC.

 Coffin Mew has been asked by recruitment sector clients whether pay to temporary workers supplied to clients should be included in the recruitment company’s pay bill for the purposes of the Apprenticeship Levy. Unfortunately, as the legislation currently stands, the answer is “yes”.

 All payments paid to a recruitment company’s internal employees, temporary workers on a contract of employment and temporary workers on a contract for services should therefore be included when calculating the pay bill and eligibility to pay the Levy.

Draft Regulations for specifically calculating the Apprenticeship Levy are still under consultation, so there may be some change to provide an exception for recruitment companies. However, our view is that there is unlikely to be any alteration or specific exemption for the recruitment sector.

We will be monitoring the consultation and will keep the recruitment sector informed of any developments. If you wish to discuss the impact of the Apprenticeship Levy on your recruitment company, please contact Amanda Brockwell head of our Recruitment Sector Team on 023 8057 4302.