Scottish employers are facing increased complexity and administrative costs following the recent decision by the Scottish Government on how it manages the Apprenticeship Levy (AL), according to Grant Thornton.

The business and financial advisor is warning the decision by Holyrood to take a different approach to the levy from the rest of the UK could leave companies north of the border facing unnecessary higher costs and loss of competitive edge.

The AL launches in April throughout the UK and will see all businesses with employees liable to pay an amount equal to 0.5% of their ‘pay bill’ in excess of £3m. The tax is designed to help fund the provision of apprenticeship training and other initiatives.

Apprenticeship provision is a devolved policy area, meaning the Scottish Government has the power to decide how to implement and manage the system. In England, businesses will be able to access a new ‘digital account’ to draw down the funds required to support their Modern Apprenticeship training.

However, the Scottish Government has chosen instead to use the additional funds to provide funding for other initiatives such as Individual Learning Account funding and Rural supplements for training providers in remote areas.

The changes mean Scottish employers will need to indirectly access funds and those with cross-border business interests will face two separate administrative systems.

Monica Houston, tax manager at Grant Thornton in Scotland, said: “The Scottish Government’s approach to Modern Apprenticeships has gained a global reputation for its standards of quality and effectiveness in tackling youth unemployment and other long term social issues. There’s no doubt that its approach to managing the Apprenticeship Levy is aimed at continuing this laudable approach.

“However there are some key challenges that could hit employers at a time when they need as much support as possible. Many businesses, especially those operating across both sides of the border, face increased bureaucracy and potentially higher costs. It’s essential that the changes are communicated clearly and effectively with full support offered as the Apprenticeship Levy is rolled out.”