HM Treasury has announced a package of reforms to the apprenticeship levy, including an increase in the amount of levy funds that charities will be able to transfer.
Currently, charities and other organisations that pay the levy are able of transfer 10 per cent of unspent funds they receive from the levy to another organisation of their choice.
However, on Monday chancellor Philip Hammond announced that this cap will rise to 25 per cent from next April.
A press release from the Treasury issued on Monday said: “An extra £90m of government funding will enable employers to invest a quarter of their apprenticeship funds on people working for businesses in their supply chain – boosting the number able to benefit from high-quality apprenticeship training.”
A spokesman for the Treasury confirmed that the funding will also be able to be transferred to “skills sector or local economy”, which can include other charities.
An unpopular scheme
The apprenticeship levy has been an unpopular scheme with the charity sector since its introduction in April last year.
The levy requires all organisations with a staff payroll of more than £3m to pay 0.5 per cent of their total wage bill to the government.
In turn, the government provides £15,000 to the employer to offset the cost of implementing the scheme.
The money the organisation pays goes into a separate account, which can only be spent on apprenticeship training and assessment for apprentices that work at least 50 per cent of the time in England.
Paying organisations can access money in this account for up to 24 months but after this period the government removes any unspent funds.
Charities are unlikely to be able to reclaim all the levy money they have paid, because most do not offer enough apprenticeships.
Commenting on the latest levy reforms, Caron Bradshaw, chief executive of Charity Finance Group, said: "Movements to improve the ability of organisations to use the proceeds of the apprenticeship levy are to be welcomed.
"We're glad that government is taking this step and would urge them to give more thought to how charities specifically could be supported better to engage positively with the levy.
"It's still the case for too many charities that the levy is simply another tax and more should be done to support the sector to ensure maximum funds are available for beneficiaries."