The government has announced an overhaul of the UK’s apprenticeship system.

A new growth and skills levy which will replace the existing apprenticeship levy and include new foundation apprenticeships.

The government says these new apprenticeships will give young people a route in to careers in critical sectors, enabling them to earn a wage whilst developing vital skills.

The new levy will also allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training than under the existing system – where apprenticeships must run for at least 12 months.

The training eligible for funding under the new levy will develop over time, informed by Skills England’s assessment of priority skills needs, the government adds.

The Department for Education will set out further details on the scope of the offer and how it will be accessed in due course.

Alex Veitch, Director of Policy at the British Chambers of Commerce, said:

‘Skills shortages continue to be a major concern for businesses and a drag on economic growth.

‘The proposed new Growth and Skills Levy was a key part of the government’s plans at the election. It is welcome ministers have acted early to give more details about skills reform.

‘We’ve long argued that the current Apprenticeship Levy needs urgent reform to make it more flexible. Businesses need a simple, coherent and responsive system that properly incentivises employer investment in training.’

Internet link: GOV.UK BCC

HMRC has been urged to defuse a tax bombshell threatening online traders, by the Low Incomes Tax Reform Group (LITRG).

The LITRG, which is part of the Chartered Institute of Taxation (CIOT), says the tax authority must take action in order to make sellers aware of the fact that they may need to file a tax return and pay tax on their online trading income.

The group said that although there is no change to existing tax rules, HMRC will have more information on who is earning income via online platforms and will be more able to find out who owes tax on their earnings.

The LITRG argues that the new reporting rules could ’cause chaos’ for taxpayers when the first reports are sent to HMRC and sellers in early 2025.

It has called on HMRC to strengthen its guidance for sellers using online platforms and standardise information so that users can easily understand it and report earnings by tax year.

Claire Thackaberry, Technical Officer at the LITRG, said:

‘There are just over three months to go until HMRC starts getting information about the income and activities of people who use online platforms to make money. We are concerned that we will see the same chaos and confusion that arose when the rules first came into effect.

‘Time is running out for HMRC to defuse this ticking time bomb. The information that HMRC will receive from platforms will be presented by calendar year, therefore covering more than one tax year. This could make it more difficult to work out when tax is due.’

Internet link: CIOT

An estimated £5.5 billion was lost due to tax evasion during 2022/23, according to a report published by the National Audit Office (NAO).

The NAO stated that ‘significant weaknesses’ in government systems have left the UK ‘too open’ to tax evasion. According to HMRC, 81% of the tax evasion came from small businesses.

HMRC said that, while the overall level of tax evasion has stabilised in recent years, it has increased amongst small businesses. Whilst HMRC has not estimated the scale of evasion by sector, it considers takeaways and sweet shops as high-risk retailers.

The NAO said that HMRC does not have a specific strategy to clamp down on tax evasion, and instead aims to stop overall levels of non-compliance increasing.

It also said that there has been too little emphasis on some widespread forms of tax evasion, such as electronic sales suppression (ESS) and abuse of the insolvency process to avoid paying tax debts, which is known as ‘phoenixism’.

Gareth Davies, Head of the NAO, said:

‘Although tax evasion has been growing among small businesses, HMRC has so far lacked an effective strategic response.

‘Its assessment of risks has given too little emphasis to widely used methods of evasion such as sales suppression and phoenixism. It has also failed to use new powers to tackle tax evasion.’

Internet link: NAO

Over half a million young people are yet to lay claim to Child Trust Funds worth an average of £2,212, HMRC has said.

Child Trust Funds are long term, tax-free savings accounts which were set up, with the government depositing £250, for every child born between 1 September 2002 and 2 January 2011.

Young people can take control of their Child Trust Fund at 16 and withdraw funds when they turn 18 and the account matures.

The savings are not held by the government but are held in banks, building societies or other saving providers. The money stays in the account until it’s withdrawn or re-invested.

If teenagers or their parents and guardians already know who their Child Trust Fund provider is, they can contact them directly. If they do not know where their account is, they can use the online tool on GOV.UK to find out their Child Trust Fund provider.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:

‘Thousands of Child Trust Fund accounts are sitting unclaimed – we want to reunite young people with their money and we’re making the process as simple as possible.

‘You don’t need to pay anyone to find your Child Trust Fund for you, locate yours today by searching ‘find your Child Trust Fund’ on GOV.UK.’

Internet link: GOV.UK

The government has announced a crackdown on late payments to small businesses and the self-employed.

Late payments cost SMEs £22,000 a year on average, according to Smart Data Foundry, while the Federation of Small Businesses says it leads to 50,000 business closures a year.

The government will consult on new laws that will hold larger firms to account and aim to get cash flowing back into businesses.

In addition, new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports – putting the onus on them to provide clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating.

Anna Leach, Chief Economist at the Institute of Directors (IoD), said:

‘For small businesses in particular, the time taken to pay an invoice matters. Companies that are paid swiftly can raise their productivity by spending more time on projects of economic value and less time chasing invoices.

‘We know from our research that there is a significant lack of awareness amongst businesses of the ability to check on the payment practices of large employers, and even fewer feel able to take enforcement action against their customers.

‘By ensuring that there is increased visibility of payment practices, reputational pressure will spur change in poorly performing firms, rather than smaller suppliers needing to try and negotiate in isolation.’

Internet link: GOV.UK IoD