24+ Advanced Learning Loan 3 Frequently Asked Questions. Questions from employers Manager’s Choice
Peter StoneFounder of Apprenticeships Life
“Could I be accused of age discrimination by expecting my employees who are aged over 24 to take out a loan?”
Responsibility for justifying the different funding arrangements pre/post-24 will lie with the Government, rather than individual employers. The difference of treatment on the basis of age does not contravene the Equalities Act 2010 if the policy can be objectively justified. The Government believes that grant funding should be prioritised to focus on learning for young adults and those who need English and maths skills. Funding is therefore being concentrated on areas where it can have the most impact, which in practice means funding courses for those who will benefit most from learning. Those aged 24 and over undertaking courses at level 3 and level 4 and Advanced and Higher Apprenticeships will be expected to invest more in their own learning, but for the first time, they will have access to a system of loans to support them to make this investment, which will only need to be repaid once the learner has left their course and is earning more than £21,000.
“Can I repay the loan for my employee?”
Yes. Employers can make voluntary payments for part or the whole of the loan amount on behalf of their employees. Employers can make individual agreements with their employees about loan repayment.
“What are the tax consequences if I choose to make loan repayments on behalf of my employee?”
If an employer makes student loan repayments on behalf of an employee, or makes a lump sum payment to write off the full amount, then the tax treatment is the same as for any other type of loan. The amount paid off is subject to tax and NICs as employment income in the hands of the employee.
“My employees are not likely to earn more than £21,000, is that a problem?”
No. It is not expected that everyone who takes out a loan will repay it straight away, and any outstanding balance on a loan will be written off after 30 years.
“My employees are earning more than £21,000 now. Will they have to repay straight away?”
People will not have to repay until after they have finished their course and are earning over £21,000. No repayments will be made via the tax system until April 2016. If your employee finishes their course before April 2016, repayments will only start from April 2016. Those finishing after April 2016 will go into repayment from the following April – assuming that they are earning over £21,000. They will, however be able to make voluntary repayments direct to the Student Loans Company at any stage.
Questions from Apprenticeship employers
“Can I repay the loan for my apprentice?”
Employers can make voluntary payments for part or the whole of the loan amount on behalf of their employees. Employers can make individual agreements with their employees about loan repayment. Employers will be given support from the National Apprenticeship Service to help employees aged 24 and over wishing to undertake an Advanced or Higher Apprenticeship using a loan.
“If an apprentice is made redundant and cannot find another employer to employ them so they can complete the framework, is the loan written off or are they expected to repay even though they have not completed the course through no fault of their own?”
Any apprentice who has been made redundant will be fully supported to find alternative employment and continue their programme. If this is not possible they will be liable for all payments made to the college or training organisation until the point of withdrawal.
“Will the loan to the employee take account of my employer contribution?”
Yes. The maximum loan amount for an apprentice is set at 50% of the total cost of the Apprenticeship; this reflects the expected contribution from you as their employer. This employer contribution can be made either in cash or in kind. All eligible Apprenticeship frameworks must be approved for public funding by the Skills Funding Agency. This information is published on the Agency’s website and includes the maximum loan values.
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