The Freelancer & Contractor Services Association (FCSA) has spoken out against the unfair impact that the Government’s planned Apprenticeship Levy will have on Umbrella Services – an impact that may force some of them out of business.

The Levy is due to come into force in May 2017 and will, as its name implies, levy employers to raise funding for three million new apprenticeship places. Earlier this month, despite concerns from business lobbyists that the Levy has been poorly designed and would damage rather improve the quality of trading, the Government insisted that it would go ahead as planned.

A number of business lobbyists have reacted with dismay to this determination, believing that in the era of Brexit uncertainty, the Levy would damage UK business prospects.

Apprenticeships and skills minister Robert Halfon said: “Apprenticeships give young people – especially those from disadvantaged backgrounds – a ladder of ‎opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The Apprenticeship Levy is absolutely crucial to this.”

Employers with a payroll in excess of £3m will be subject to the Levy and will be charged at 0.5 per cent of their annual pay bill.

However, the FCSA are urging the Government to exempt Umbrella Companies from the charge because the vast majority of their payroll comprises freelancing and contracting professionals – skilled workers who tend to personally finance their own professional development and expanding skills bases.

The trade association has decided to speak out on this issue in response to the Government’s consultation on the Levy, which has finally been issued after several months of delay but has only allowed a narrow timeframe of three weeks for businesses to respond.

FCSA Chief Executive Julia Kermode expressed disappointment that Government policymakers had so far not listened to the concerns of businesses, appearing instead to be pressing ahead with the plan, regardless of the concerns raised by numerous different parties.

She went on: “The Apprenticeship Levy as it stands is not fit for purpose and does not consider that some businesses have artificially high payrolls, like Umbrella Companies and recruitment firms.”

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