The Apprenticeship Levy is ‘not a stealth tax’, a leading expert has said as the deadline draws closer to British business missing out on a collective £2.5 billion in contributions.

Addie Marks, of Jonathan Lee Skills Consultancy, offers advice to businesses on how best to use the Apprenticeship Levy and believes the monthly payments should be viewed as an opportunity for companies to address their skills shortages.

Since April 2017, any company with an annual employee wage bill in excess of £3 million has been required to make monthly payments to the Apprenticeship Levy, an initiative launched by the Government to encourage employers to invest in training.

As of September last year, UK employers had deposited £2.7 billion into the levy, but only 14 per cent of the total has been accessed and reinvested in staff training and development programmes.

Businesses can draw the total value of their contributions to fund apprenticeship schemes through recognised training providers within two years of the payment dates. Any money not accessed within that timescale is lost to the Exchequer so the first contributions will be forfeit from April 2019.

Mr Marks said: “There is a widely-held misconception that the Apprenticeship Levy is a stealth tax which offers no benefit to their business model. Too many companies are paying into the levy and getting nothing in return.

“It provides a real opportunity for employers to drive business improvement by addressing skills shortages and improving retention of key staff which can have a significant positive impact on productivity and help the company grow.”

He said several firms nationally were spending vast amounts on commercial training whilst simultaneously paying six- or seven-figure sums into the levy.

“Many businesses simply haven’t realised that spending can be offset against their levy contributions and are therefore essentially paying for training twice.

“The term ‘apprenticeship’ can be off-putting for employers.

“They perceive the new system to be heavily bureaucratic, to lack access to directly relevant accredited courses and to be available only to school leavers.

“Apprenticeship Levy funds can only be used on apprenticeships, but this terminology now covers a very wide spectrum of subjects, specialisms and levels, some of which are equivalent to a masters degree.

“The Government is bringing out new frameworks and programmes on an almost daily basis and our role is to educate employers in understanding the new system and how to use it as a vital training tool.

“We also hear concerns from employers about the need for off-the-job training, fearing they will lose their staff for one day a week to college. That is also far from a reality under the scheme; learning can be delivered in the workplace or in virtual classrooms, so impact on productivity is minimal.

“Apprenticeships are no longer off-the-shelf commodities; content can be tailored to make courses directly relevant.”