RHA highlights impact of new apprenticeship tax

The Road Haulage Association (RHA) has expressed concern that many fleet operators are unaware of imminent taxation changes, which have been introduced by the government to fund apprenticeships.

The apprenticeship levy, which comes into force on 6 April with the new tax year, will apply to all employers operating in the UK with an annual pay bill exceeding £3 million, and will be operated via the PAYE process.

For example, an employer with an annual pay bill of £5 million will contribute £10,000 through the levy.

Once the levy is in operation, employers in England will be able to access funding for apprenticeships via a new digital service account. Separate arrangements will exist in the devolved nations, but the levy applies to employers across the UK.

The RHA said the levy was “unwelcome”, but that it would work to ensure transport operators of all sizes could take full advantage of the new recruitment and training opportunities the scheme will afford them.

“It has become clear that while most firms know that there are new industry apprenticeships, many are unaware that at the same time they are going to be taxed,” said Colin Snape, RHA deputy policy director for employment and skills.

“This new tax, which is currently set at 0.5 per cent of payroll cost above the £3 million threshold, will hit haulage firms with roughly 80 trucks or more, or those with a smaller fleet if they have other activities within the business, such as van operations, warehousing, workshop or other activities.

“And we cannot rule out the possibility of that £3 million threshold being reduced in future years.”

“The only way firms can avoid simply losing the money they pay in this new tax is to get it back as funding for an apprenticeship.”

He continued: “The new Trailblazer apprentices such as LGV driver, warehouse operative and supply chain operative (for those working in the traffic office) are well funded from April next year. Some RHA members are considering establishing their own in-house training operation; others are seeking out local training providers.

“I expect that levy payers will make up most of first wave of interest in the new Trailblazer apprenticeships but firms of all sizes will follow close behind. Companies with payroll of less than £3 million escape paying the levy – but will be able fully to access funding for apprenticeships, with even better packages for small companies.”

In November, the Freight Transport Association called for the Treasury to look again “at the implementation of the apprenticeship levy, to ensure that it better meets businesses’ needs”.

The Skills Funding Agency has released an online tool to allow organisations to estimate the amount they will pay via the levy, how much they will have available to spend on apprenticeships, and the level of government contribution towards training costs.