The UK Government’s plans to introduce the Apprenticeship Levy, due to take effect in April 2017, have been met with mixed response by intermediaries with 14% of them believing their businesses could be at risk of bearing additional costs of the Levy, according to research by the Freelancer and Contractor Services Association.

The study shows that 38% of respondents say they have no plans about how they are planning to fund the Levy with 9% claiming they will have to absorb it as an overhead. Furthermore, 40% of respondents said they would consider hiring apprentices within their own businesses, despite the levy not offsetting the full cost of doing so.

“Government policy makers have clearly not listened to the sector’s concerns and are pressing ahead with something that is simply not fit for purpose and not appropriate in our industry,” Julia Kermode, Chief Executive of FCSA said. “Intermediaries like umbrella companies and recruitment firms have artificially high payrolls and the Levy is one more cost to be borne, effectively another tax on a sector that has had more than its fair share of additional burden in recent years.  Intermediaries are clearly concerned about the impact the Apprenticeship Levy will have on their businesses with 14% of our respondents telling us that they fear going out of business because of the Levy and that is a grave concern.”

The Apprenticeship Levy will come into force in April 2017 and will affect all companies with a payroll of £3 million or more.