Have you seen these indicators of potential money laundering or fraud? Posted 04/10/2025 by AAT Comment & filed under Anti-money laundering, Members. The UKFIU’s Suspicious Activity Reports (SARs) Reporter Booklet March 2025 is out now. Your regular CDD, risk assessments and SARs are helping detect suspicious activity as early as possible, and preventing crime. SARs are a critical intelligence resource for law enforcement – they provide information like phone numbers, addresses, company details, investment activity, bank accounts and details of other assets. They have been instrumental in identifying sex offenders, fraud victims, murder suspects, missing persons, people traffickers, fugitives and terrorist financing. Ethics and the digital world Visit the AAT Lifelong Learning Portal to find out more about the ethical impact of digital technologies on you as an accountant (log in to view). Find out more Accountancy and bookkeeping firms (including sole practitioners) play a critical role in alerting law enforcement to potential instances of money laundering and terrorist financing. Undertaking regular Customer Due Diligence (CDD) and risk assessments can help firms detect instances of suspicious activity as early as possible and the submission of SARs can help reduce and prevent financial crime. SARs case studies The latest SARs Reporter Booklet published by the UK Financial Intelligence Unit (UKFIU) uses case studies to provide a snapshot of how Suspicious Activity Reports (SARs) intel initiates and supports law enforcement investigations. Risk indicators and the Accountancy AML Supervisors Group Risk Outlook Some of the key risk indicators leading to the submission of the SARs in the case studies used include: multiple identical payments made by a customer to the same entity, outside of normal business hours large deposits being gambled which were inconsistent with the customer’s profile of a student with a part-time job unexpected payment activity and excessive annual turnover for the company’s size a payment of over £10,000 received from an overseas company account to which the customer had no apparent links. Firms are reminded that the risk of money laundering and terrorist financing is constantly evolving. Firms should regularly review the Accountancy AML Supervisors Group Risk Outlook (PDF), and any other risks published by their supervisory authority (such as the AML Alerts that AAT publishes in Knowledge Hub) to make sure they have identified all the areas relevant to their own business. Especially as risks may evolve because of changes to the firm’s client base, geography and services provided. Guidance on making an SAR Chapter 6 of the CCAB’s Anti-Money Laundering, Counter-Terrorist and Counter-Proliferation Financing Guidance for the Accountancy Sector provides guidance on what suspicious activity must be reported, when and how a report should be made to the National Crime Agency, and matters which may require a Defence Against Money Laundering (DAML). The quality of an SAR can affect the UKFIU’s ability to prioritise and process the report. It can also affect the relevant agency’s decision or ability to investigate. Before making an SAR, firms should familiarise themselves with the UKFIU’s Guidance on Submitting Better Quality SARs. AAT’s AML helpline AAT’s AML helpline offers advice for AAT-supervised firms on all aspects of complying with the Money Laundering Regulations, such as advice on how to report suspected illegal activity. To discuss any questions you might have, call us on +44 (0)20 7367 1347 or email [email protected]. Ethics and the digital world Visit the AAT Lifelong Learning Portal to find out more about the ethical impact of digital technologies on you as an accountant (log in to view). Find out more
AML update: Updated list of high-risk third countries Posted 04/10/2025 by AAT Comment & filed under Anti-money laundering, Members. FATF has revised the list of high-risk third countries as below. Check if any of your clients now require enhanced due diligence. The latest Financial Action Task Force (FATF) Plenary concluded on 21 February 2025 with the following revisions being made to the list of high-risk third countries (HRTC). Added to the list of Jurisdictions under Increased Monitoring Lao People’s Democratic Republic (PDR) Nepal Removed from the list of Jurisdictions under Increased Monitoring Philippines What does this mean for my firm? Firms (including sole practitioners) must review their existing client list to identify whether any of their clients are now considered to be established in a HRTC and undertake appropriate enhanced customer due diligence (EDD) measures. Firms must also consider whether the changes mean their clients are no longer connected to a HRTC and consider the level of customer due diligence required using a risk-based approach. Guidance around EDD measures can be found in Section 5 of AML Guidance for the Accountancy Sector (PDF). Firms must also ensure their client onboarding procedures refer to the updated HRTC lists. These lists are updated three times a year, on the final day of each FATF Plenary meeting, held every February, June and October. The dates of these meetings are published several months in advance, in the events calendar on the FATF website. AAT’s AML helpline AAT’s AML helpline offers advice for AAT-supervised firms on all aspects of complying with the Money Laundering Regulations, such as advice on how to report suspected illegal activity. To discuss any questions you might have, call us on +44 (0)20 7367 1347 or email [email protected].
Upskilling to address the skills gap Posted 04/10/2025 by Annie Makoff & filed under Members, Skills. Recruitment is only part of the puzzle. Accountants explain the training and qualifications they’re rolling out. The accountancy sector has been struggling with a skills gap for many years, made worse by the knock-on effects of the Covid-19 pandemic and increased competition for talent in a shrinking talent pool. It’s not an issue unique to accountancy, but as a sector, it’s certainly one of the most affected. Experienced financial professionals are retiring faster than young professionals are being recruited. Indeed, there have been warnings from industry analysts that the numbers of accountancy students and newly qualified accountants are in decline. Research from AdvanceTrack in 2024, for example, revealed that the number of students enrolled on accountancy courses declined by 56% between 2010 and 2023. Meanwhile, Skills England research revealed that accountants and finance technicians are one of ten roles which are very much in demand. More recently, there’s been an increased need for specialist skills in response to technological changes such as AI and automation, but firms are struggling to find the right people with these capabilities. Addressing the talent shortage plaguing the sector can’t be easily solved with recruitment drives, even for firms that are in a position to hire. Upskilling provides an answer. We spoke to several accountancy firms that are doing just this to find out how they’re going about it. Looking to tackle your skills gap? AAT Careers Hub is full of careers advice and job listings to help find the right role or employee for you. Find out more We’re upskilling through formal qualifications, cross-skilling and focusing on technical competencies Rachael Chadwick-Harrison MAAT, Chartered Accountant and MD, Chadwick Accountants The finance sector is undergoing rapid change, so there’s an increased demand for a technically competent, adaptable, tech-savvy and forward-thinking workforce. One of the most effective ways to tackle the skills shortage is through meaningful and sustained upskilling. Here’s how: Introduce formal qualifications: Introducing formal qualifications for staff who may be stuck in lower-level roles can open doors, provide a clear career pathway, and equip them with the credentials needed to move forward. Focus on technical competencies and AI: advanced Excel skills, Microsoft Power BI and other data visualisation tools is now integral to modern financial reporting and analysis. The ability to harness data effectively and actively embrace AI is becoming a core expectation in many roles. In my own practice, upskilling and staff development are embedded in our culture. In particular: We run in-house tax workshops, delving into complex real-life tax cases. These sessions help staff transition from technical doers to informed business and tax advisers. We deliver intermediate tax training to support our bookkeepers in expanding their understanding of company and personal tax. We’ve developed a comprehensive internal VAT guide, complete with a tailored exam, ensuring all team members are equipped with a robust understanding of diverse VAT rules and scenarios. Every team member is enrolled in a professional training programme – including AAT, CIPP, CIMA and ACCA. We focus on cross-skilling. By encouraging staff to build knowledge across multiple disciplines, we’re creating agile, well-rounded professionals who are confident handling a variety of client needs. Verdict: Upskilling through formal qualifications, technical or new technology training to empower teams and create a more resilient industry. We upskill by providing a continuous learning environment Caroline Carter FMAAT, Director, Carter Clear Accounting Upskilling is key to tackling the current talent shortage because it enables us to develop the capabilities the team need from within, rather than relying solely on recruitment in a highly competitive market. We are continuously upskilling our small team of five by: Bringing the apprenticeship framework to life through shadowing, peer support and hands-on experience with real clients. Investing in external training such as social media skills or effective networking. Leading by example to teach ‘soft’* skills such as ethics, leadership, integrity and being proactive and embedding these values into our culture. To do this, our staff are client-facing from day one. In my view, the real skills gap isn’t about technical know-how, it’s the so-called ‘soft’, interpersonal skills that are often missed, especially in larger firms. In smaller firms like ours, we have the opportunity to address the skills shortage early by creating a workplace culture that values development, interaction, and real-world application from the outset. Upskilling is a mindset shift and creating an environment where continuous learning isn’t a ‘tick box’ exercise of technical stuff, but is driven by awareness of skills gaps and the desire to learn. Verdict: We’re upskilling by creating a continuous learning environment which goes beyond the tick-box. *At AAT, we think ‘power skills’ is a more fitting name for these. Introduce intergenerational mentoring initiatives Martin Tregonning, Chartered Accountant and Founder, Tregonning & Co Chartered Accountants There is essentially a two-way knowledge gap between Gen X and Gen Z and the need for what we call intergenerational mentoring. A large portion of experienced accountants are not digitally engaged. We are at risk of losing all that experience and knowledge in the profession because they are not keeping up and are liable to bow out. The other end of the issue is that younger accountants are very digitally aware and good with social media, but they lack experience and some of the skills. Sadly, many of the more experienced accountants don’t see it as a priority to either mentor or encourage them. The arguments on this are often partisan with either side viewing the other pejoratively as the “tik-tok” generation or the “old fogies”. But both need to learn – neither group has what it takes to make a success of things in the new economy, and so we need to develop this idea of collaborative/two way/intergenerational mentoring. I heard an event speaker recently who said that the key to surviving the next few years of economic uncertainty is to invest for resiliance and growth. In terms of addressing the skills gap, that resonates. As a firm, we are actively investing in training while building in resilience such as having more than one person capable of doing the one job so if one person exits, that doesn’t create a knowledge loss. Verdict: Introduce ‘intergenerational mentoring’ initiatives to address the knowledge gap. Looking to tackle your skills gap? AAT Careers Hub is full of careers advice and job listings to help find the right role or employee for you. Find out more
ACSPs, are you meeting the Companies House ID verification standard? Posted 04/08/2025 by AAT Comment & filed under Anti-money laundering, Members. Companies House has launched the Authorised Corporate Service Provider (ACSP) registration service. Here’s the guidance you must be familiar with. On 18 March 2025, Companies House launched the Authorised Corporate Service Provider (ACSP) registration service. AAT previously covered the impact of the implementation for ACSPs and what this means for AAT-licensed members in this article. Since then, the ACSP registration has launched and with it came guidance published by Companies House: applying to register as a Companies House authorised agent being an authorised corporate service provider how to meet Companies House identity verification standard. Separate standards It is important that all firms acting as ACSPs familiarise themselves with the above guidance, paying particular attention to the identify verification standard. That’s because this differs from the identify verification standard required for anti-money laundering purposes. There are also different record-keeping requirements in that identity verification documentation for ACSP purposes must be kept for seven years. AAT is also aware that some applications for ACSPs have had to be rejected as the information provided by the application does not match the information held by AAT. As a reminder, if you do register as an ACSP and are an AAT licensed member with a firm supervised by AAT for AML purposes, you must provide your AAT membership number (not your licence number) when asked for your AML number. AAT’s AML helpline AAT’s AML helpline offers advice for AAT-supervised firms on all aspects of complying with the Money Laundering Regulations, such as advice on how to report suspected illegal activity. To discuss any questions you might have, call us on +44 (0)20 7367 1347 or email [email protected]. Ethics and the digital world Visit the AAT Lifelong Learning Portal to find out more about the ethical impact of digital technologies on you as an accountant (log in to view). Find out more
UKFIU accountancy sector SAR Best Practice Workshops available Posted 04/03/2025 by AAT Comment & filed under Anti-money laundering, Members. UKFIU is offering workshops aimed at smaller firms, with AML compliance teams of five or fewer staff. Here’s how you can apply. Register your interest here The UKFIU Engagement Team is delivering monthly, sector-specific SAR Best Practice Workshops. Their April 2025 workshop is tailored to the Accountancy sector, and will be delivered via Teams Webinar from 13.00-16.00 on Tuesday 29 April. The workshop is aimed at Money Laundering Reporting Officers (MLROs), Nominated Officers (NOs) or colleagues who write SAR submissions within organisations with AML compliance teams of five or less. To register your interest, please follow the below link and complete the expression of interest form. The UKFIU Engagement Team will be in touch with further information and an invitation to attend the session. Places are limited, but further sessions will be offered later in the year for those that miss out on this one. Register your interest here
9 writing tips to help you through your studies Posted 04/01/2025 by AAT Comment & filed under Students. Accountancy isn’t just about punching in numbers; you’ve got to explain complicated concepts, such as accruals, or why profit isn’t the same as cash. As with all technical subjects, this can be intimidating to the non accountants whom you deal with on a daily basis. Especially when dealing with time-poor individuals, you need to be able to get to the point quickly and clearly when it comes to your writing. These are the nine points to follow to master good writing. Some are our own, but the last five come from George Orwell, the author of Nineteen Eighty-Four and Animal Farm. George Orwell’s writing rules may date back to 1946, but they still ring true today, no matter what you’re writing. 1. Practice, practice, practice You may or may not be intimidated when it comes to report-writing but, no matter what your writing ability, the truth is that, as with any skill, you’ll get better the more you do it. Make time to write, and review your work to see how you might be able to improve it. 2. Make a draft Use Word (or whichever software you have) to write a draft before putting together your final report. This allows you to constantly edit and rewrite. It really helps with spelling and grammar too. 3. Speak as you write Read your words in your head and imagine saying them out loud. 4. Mention the obvious Assume your reader doesn’t know anything. Write clearly so that anybody can understand you. 5. Avoid clichés Never use a metaphor, simile or other figure of speech that you are used to seeing in print. They clutter up your writing, and are overused to the point of being boring. 6. Keep it snappy Never use a long word where a short one will do. If it is possible to cut a word out, always do so. 7. Keep it ‘active’ Never use the passive voice where you can use the active – so ‘he ran’ (active) rather than ‘he was running’ (passive). This will make your writing clearer. 8. Ditch the jargon Never use a foreign phrase, a scientific word or jargon if you can think of an everyday English equivalent. 9. Break the rules Orwell said: “Break any of these rules sooner than say anything outright barbarous.” What he meant is that no rules are hard and fast in writing. Ignore the rules if doing so makes what you’re writing easier for the reader to understand. Access the writing skills e-learning module here (login required)
Your Spring Statement 2025 reaction Posted 03/26/2025 by Annie Makoff & filed under Members. Here’s how accountants and bookkeepers feel about the economy and public finances following Labour’s announcement. Chanceller Rachel Reeves delivered her Spring Statement today (Wednesday) amid widespread speculation across business groups and the media who voiced concern around slow economic growth and potential tax rises. Controversial plans to make huge benefit and welfare cuts also made headlines in the build up to the event. Delivering her statement, Ms Reeves reiterated her commitment to not raising taxes and insisted her fiscal rules which would bring ‘economic stability’ and ‘security to working people’ were ‘non-negotiable’. Spring tax series AAT Masterclass: Stay ahead of tax changes with expert insights and practical guidance, 1 and 15 May. Sign up now But pointing to an ‘uncertain economy’, ‘unstable trade’ and rising borrowing costs, Reeves revealed that the UK growth forecast has halved for 2025 from 2% to 1% according to modelling from the Office for Budget Responsibility (OBR). The OBR predicted that her 2024 budget would have led to a £4.1bn deficit in 2029-30, although it had previously forecast a £9.9bn surplus. Steps – further savings – therefore needed to be taken to restore the £9.9bn surplus, she said, which include welfare and benefit cuts, further crackdowns on tax evasion, cuts to aid, civil service cuts and transforming public services. However, capital spending will increase by £2bn a year and an additional £2.2bn has been allocated for the Ministry of Defence. And the economy could be ‘larger’ than previous OBR predictions by 2030, Reeves insisted, with households £500/a year ‘better off’ under the current government. The OBR have also speculated that the UK’s tax share could be the highest levels since World War II. So what does all this mean for businesses? We asked AAT members for their views. OBR figures give little reassurance or incentive for businesses to increase investment Ellis Harris-Boulter MAAT, Founder and Director, FieCo Accountancy and Marketing and AAT Tutor The most telling takeaways from today’s Spring Statement come from the OBR’s economic forecasts. Inflation is expected to rise to 3.2%, up 0.6%, while growth has been revised down from 2% to 1%. For businesses already treading cautiously after bearing the brunt of last October’s £40bn tax rise, these figures offer little reassurance. In this context, what incentive does a business owner have to invest in new technology, expand their workforce, or contribute to the pro-growth economy the UK urgently needs?Nothing from the statement is particularly surprising – maybe this is because virtually the entire set of policies were already known to the media. Information was released in a way which made those claiming PIP and universal credit anxious for their livelihoods, with ministers offering little clarity or reassurance. And this speaks to Labour’s biggest problem across the board – marketing. From the doom and gloom economic outlook last year that discouraged growth, to the uproar of the Family Farm Tax (which, even if it raises the estimated £115m, seems hardly worth the political cost), and the cut in overseas aid today, much of the pessimism surrounding the economy may stem not only from the extremely challenging economic environment itself, but also from how it’s being presented. If the Government want more positive future forecasts, it needs to not only offer economic stability, but also communicate effectively, since confidence drives investment as much as policy. Verdict: OBR figures give little reassurance or incentive for businesses to increase investment. No big surprises but welfare cuts will have huge implications Graham Hunt AATQB, AAT student As a disabled man with cerebral palsy, I am slightly apprehensive about the further welfare cuts proposed and what the implications will be for the government’s ‘get-back-to-work’ plan. I was also frustrated by the implication that it’s the fault of jobseekers themselves that unemployment is so high. They never seem to ask what the hiring managers are looking for in an employee. Overall, there were no big surprises in the Spring Statement because everything was as expected due to media speculation in the lead up. So the focus on defence spending and further welfare cuts in order to balance the books were expected. Verdict: No big surprises in the spring statements but welfare cuts to balance the books will have massive implications. Not perfect, but a step in the right direction Polina Dimitrova AATQB PM. Dip ACIPP Licensed Bookkeeper and Accounts Supervisor, Visual Synergy The Spring Forecast announced today definitely had some interesting points. The standout for me was the extra £2.2 billion being allocated to defence. It’s a strong signal that the government is taking security seriously, especially with the aim of hitting 2.5% of GDP on defence spending by 2027. I also liked that they’re sticking to funding major infrastructure projects – it’s good to see they’re not cutting corners when it comes to long-term growth. One thing that caught me off guard was the revised growth forecast for 2025. The OBR slashed it in half, which feels like a pretty big adjustment. And the welfare cuts—especially the 50% reduction in the Universal Credit health element for new claimants—were a bit of a surprise. I can see why these moves are being made, but they’re bound to stir some debates. Overall, I feel quite positive about the forecast. It strikes a good balance between keeping the finances in check and making sure we’re investing in the right areas like defence and infrastructure. It’s not perfect, but it’s a step in the right direction. Verdict: It strikes a good balance between keeping finances in check and investing in the right areas. Spring tax series AAT Masterclass: Stay ahead of tax changes with expert insights and practical guidance, 1 and 15 May. Sign up now
AAT sanctions for AML breaches Posted 03/26/2025 by AAT Comment & filed under Anti-money laundering, Members, Practice management. AAT imposed sanctions against 75 supervised firms for Anti-Money laundering breaches in 2024, with monetary fines amounting to around £170,000 altogether. AAT issued sanctions for breaches of the Money Laundering Regulations, or for failure to appropriately register for Anti-Money Laundering (AML) supervision. One of the highest fines imposed in the drive to improve standards was £10,000 and expulsion. This was made to a firm where there had been a significant failure to comply with requirements. This follows disciplinary action being taken by AAT’s Professional Standards team. The team is still reporting significant levels of non-compliance during its practice assurance reviews. That means our supervised population may be vulnerable to criminals looking to exploit weak AML controls and procedures, and – deliberately or not – enabling money laundering. The common AML failings are outlined below, alongside the percentage of reviews graded as being non-compliant in 2024. Anti-Money Laundering findingsProportion of breaches identifiedNo written policies, procedures and controls4%No/inadequate initial client due diligence and risk procedures27%No/inadequate ongoing client due diligence and risk procedures16%No periodic review of compliance with AML requirements20%No/inadequate staff training10%No firm-wide risk assessment completed7%Missing criminality checks on Beneficial Owner, Offices and Managers (BOOMs)7%No Person of Significant Control (PSC) procedures8%Unsupervised entity1% All licensed members have a legal obligation to comply with the Money Laundering Regulations. AAT’s Registration and Assurance team will be commencing their AML monitoring reviews for 2025/26 very soon, so prepare by checking your firm has the required AML policies and controls in place, and that they are being used effectively to avoid sanctions being imposed for non-compliance. The key requirements of the legislation and AAT’s guidance and resources to assist our members to comply can be found in the dedicated section of our website. AAT’s AML helpline offers advice on all aspects of complying with the Money Laundering Regulations. To discuss any questions you might have, call us on +44 (0)20 7367 1347 or email [email protected]. Ethics and the digital world Visit the AAT Lifelong Learning Portal to find out more about the ethical impact of digital technologies on you as an accountant (log in to view). Find out more
A complete practice guide to Customer Relationship Management (CRM) software Posted 03/19/2025 by Xero & filed under Members. This content is brought to you by Xero. Customer Relationship Management software can help you foster strong connections with clients and earn new business. These systems aren’t just for storing client data – they’re for putting it to work. Here’s everything you need to know about CRM systems. What’s a CRM system and why do practices need one? A Customer Relationship Management (CRM) system is a tool for organising, tracking, and improving communications with clients and prospects. The software gathers client and prospect data in one place so you can track relationships and find ways to strengthen the connection. Common CRM features include contact management tools, marketing and sales automations, and client reporting, forecasting, and analytics. CRM systems give you the processes and tools to understand your clients better – and attract more. Instead of managing relationships with email addresses on sticky notes, handwritten meeting minutes, and sporadic phone calls, you can use a CRM system to centralise data and nurture connections. Top CRM features for practices All kinds of businesses use CRM systems, but for accounting and bookkeeping practices, there are certain features worth looking out for. Automation Day-to-day, it’s hard to keep track of who you’ve spoken to, which prospects need following up, and what stage the relationship is at. CRM automation features let you schedule follow-up messages and set reminders for contacting prospective clients – so no one gets left behind. Automatic notifications can tell you when leads are added, contacted, and require support. You can also set up automations that send clients information and answers to questions automatically, without you needing to gather the resources and send an email. Data-driven client insights If you want to gain new clients or satisfy existing ones, you need to understand them on a deeper level. CRM systems bring together data points on how many new leads you’ve generated, where and how those leads were captured, and existing client behaviour. With a CRM system, you can gain insights about how clients find you, why they choose you, and what keeps them satisfied. From here, you can make better decisions about how to engage clients, and which sales and marketing channels to focus on. Checklist for choosing CRM software Make sure you research CRM software options to find the best fit for your practice. Here’s a checklist to help you make your selection: Personalised marketing and sales tools Secure cloud-based storage Customisable workflows and features Integration with your accounting software Dashboards and reports for sales, marketing, and client behaviour Sales forecasting tools Why Xero and CRM software is a perfect match Client relationships underpin so much of practice life – it makes sense that accounting software and CRM systems should be connected. Integrating Xero software with your CRM system gives you the tools to take care of the entire client lifecycle, from first meeting to final invoice. Client data flows between Xero and your CRM system, making it easier to meet their needs. Choose from CRM systems in the Xero App Store like HubSpot or MailChimp today. If you’re not yet a Xero partner, visit our Xero Partner Programme where you can find out more about becoming a partner and join over 250,000 accountants and bookkeepers using Xero in their practice. Get the tools and resources you need to succeed. This content is brought to you by Xero.
Making the most of the apprenticeship levy Posted 03/19/2025 by AAT Comment & filed under Apprenticeships, Employer newsletter, Employers. Amid a tightening labour market and mounting skills shortages, apprenticeships have emerged as a cornerstone of workforce development. But the system has been underutilised. UK government agency Skills England found in September 2024 that employer investment in training has been in steady decline over the past decade, with expenditure at its lowest level since records began in 2011. Across the UK, almost one in 10 – or more than 2.5 million – roles are in critical demand, with more than 90% being in positions that require training or education. Despite the potential of apprenticeships, a significant portion of apprenticeship levy funds goes unspent. Spring tax series AAT Masterclass: Stay ahead of tax changes with expert insights and practical guidance, 1 and 15 May. Sign up now A 2023 study by skills development group City & Guilds revealed that levy-paying employers – organisations with a pay bill in excess of £3m – utilised an average of just 55.5% of their available funds over the past five years. “There is still a perception that apprenticeships are difficult to set up and navigate, but there are apprenticeship standards in just about any job function you would care to look at,” – Anthony Clarke, Head of Market Development, AAT. Targeted help Apprenticeships help businesses address industry-specific shortages, particularly in accounting, finance and other technical fields where there is increasing demand for skills such as data analytics, digital and business intelligence. At the same time, apprenticeships improve employee retention as staff who receive training and development are more likely to remain loyal to their employers, while also supporting efforts to create a more diverse workforce. “Apprenticeships create a talent pipeline that is developed to meet the needs of the employer,” Clarke says. “They reduce recruitment costs and training costs, and apprentices bring a fresh perspective and can be a real catalyst for transformation.” But many organisations struggle to develop a clear strategy for utilising apprenticeship opportunities, including how to allocate funds, manage unspent apprenticeship levy contributions and align their programmes with broader business goals. To deliver an effective apprenticeship strategy, employers need clear goals and objectives, and to assess where the skills gaps are, according to Anne Dibley, an associate professor at Henley Business School. “Whatever business you are in, your strategy needs to start with understanding where you are right now and what you need to get you to your required destination,” Dibley says. “The key components – skills audits, training plans, budgets and success measures – flow from this.” Use it or lose it Levy-paying employers must allocate funds wisely, as unused contributions expire after 24 months and are returned to the government. According to the City & Guilds report, approximately £3.5bn in allocated funds expired between the fiscal years 2017 and 2022. To mitigate this, employers can transfer up to 25% of their unspent funds to other businesses in their supply chain or community. This supports broader industry development and reduces wastage. For example, North Cumbria Integrated Care NHS Foundation Trust has helped smaller healthcare groups grow their own staff by transferring more than £122,000 of its levy funds to some 15 organisations, largely GP practices across the region. “We are advising businesses to look across their supply chain, identify organisations that would benefit from the apprenticeships and tell them about it, which is a great way to drive up those skills within the supply chain and build up great partnerships,” Clarke says. Raising awareness Only 2% of employers currently pay the levy, which is set at a rate of 0.5% of their total annual pay bill. However, while only the biggest businesses pay the levy, it also funds apprenticeship training for other employers who want to take on apprentices. Clarke says there is a lack of awareness among small and medium-sized enterprises (SMEs) that, while not directly paying the levy, they can still benefit through co-funded apprenticeships. SMEs contribute just 5% of training costs and the government covers the rest, making apprenticeships a highly cost-effective investment. “There is a lack of awareness within that non-levy smaller business space as to how they can engage with apprenticeships and that apprenticeships are available in just about any job type and profession that you can consider,” Clarke adds. “This is a challenge we have identified at AAT and is why we have an employer team that can help them through the process.” Growth and skills levy September 2024 In September 2024, the UK government announced a growth and skills levy that will replace the apprenticeship levy and include new foundation apprenticeships. New Levy 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. Funding To fund this, employers are being asked to rebalance their funding for apprenticeships and invest in younger workers. This will also involve businesses funding more of their Level 7 apprenticeships – equivalent to a master’s degree and often accessed by older or already well-qualified employees – outside of the levy. Further details The Department for Education will set out further details on the scope of the offer and how it will be accessed. Bespoke learning Developing an effective apprenticeship strategy isn’t just about utilising funds, says Clarke. Rather, it is about “working collaboratively with your training provider and your professional body” to design a programme that meets your organisation’s needs. For instance, while technical competencies are a crucial part of mandated professional qualifications, employers should consider more broadly the “additional skills and behaviours that are going to form part of this apprenticeship”, Clarke says. “It is looking at the wider behaviours and those core business skills that allow individuals to really add value. It is not just about being a technically competent accountant, it is about the wider power skills,” Clarke adds. Creating a culture of learning – where either the learning and development manager or respective HR team proves the importance of learning to senior leadership – requires buy-in and commitment from all those who will be involved in the apprentice’s journey. “This will involve making sure there’s tangible data and a strategy they can tap into, which will help them sell the benefits of apprenticeships for the business’s bottom line,” Steven Hurst, director of corporate learning at Arden University, says. That extends beyond attracting new blood into the workforce. The apprenticeship levy can be used to address skills gaps within the current staff, as well as supporting managers in their personal development. “Higher-level apprenticeships can also upskill those in senior roles, helping them to advance in their career,” Hurst says. Spring tax series AAT Masterclass: Stay ahead of tax changes with expert insights and practical guidance, 1 and 15 May. Sign up now This article first appeared in the March/April 2025 issue of AT Magazine.