What is the apprenticeship levy?



On 6 April 2017 the management and funding of apprenticeships changed and has transformed the way businesses engage with staff development.

What are the changes?

Most importantly, businesses have greater influence over the content of apprenticeship training and increased buying power when selecting a training partner. Through their part in identifying and agreeing new apprenticeship standards, employers representing a broad range of business sectors have designed training that’s modern, relevant, and fit-for-purpose to aid business growth.

The second major change relates to the way apprenticeships are funded. Businesses with an annual wage bill greater than £3 million pay an apprenticeship levy.

Thirdly, businesses can buy and manage their apprenticeships through the Digital Apprenticeship Service – an online portal to inform buying decisions, purchase training, and manage relationships with training providers.

What is the Apprenticeship Levy?

All employers with an annual wage bill greater than £3 million pay a 0.5% tax on payroll. The Levy is collected every month through the PAYE system alongside income tax and national insurance contributions.

The government hope the changes will help to bridge the skills gap by encouraging more businesses to invest in future talent and help it fulfil its pledge to create three million more apprenticeships in the UK by 2020.

The Levy replaces all taxpayer funding for apprenticeships for companies of all sizes.

The latest Government information about the new Levy can be found here. They also have some video content on using your Levy here.

What will employers get back?

The Levy provides employers with a ‘pot’ of training funding to spend specifically on training apprentices to help their business grow. Businesses in England are able to reclaim their levy contributions as digital vouchers to pay for training apprentices. Levy payers also receive a 10% top-up from the government to their total monthly contributions.

Unspent funds in an employer’s digital account will expire after 18 months. The Levy cannot be spent on anything other than training apprentices, so it is within the employer’s interest to employ apprentices and use the Levy they have paid.

What about smaller businesses that do not have to pay the Levy?

Employers who do not pay the Apprenticeship Levy can train a 16-18 year old for FREE - the training costs are picked up by the Government, so employers just pay the apprentice their salary.

For apprentices aged over 19 years, the employer contributes just 10% of the cost of their apprenticeship training. The Government pay the remaining 90%.

Smaller businesses can still take on apprentices therefore, and benefit from this reduced contribution rate.

There is also a Government grant of £1000 per apprentice taken on by smaller businesses when employing a 16-18 year old.

The same additional payment will be made to businesses who take on disadvantaged apprentices aged 19-24 – for example those with an education and healthcare plan provided by the local authority or those who have been in local authority care.

What can Levy funds pay for?

Funds can pay for apprenticeship training and assessment.

Businesses cannot use Levy funds for wages, travel or subsidiary costs, managerial costs, work placements, traineeships or the costs of setting up an apprenticeship programme.

Your ideal apprentice training partner:

We have been offering work-based training and qualifications for more than twenty years and our reputation for providing flexible, quality training is supported by local organisations that work closely with us.

As an employer working with us you can shape your own training programme to best suit your business needs, whilst engaging with an enthusiastic workforce that you can mould to your organisations’ requirements. This gives you flexibility and the ability to fast-track young people into your future management team.

MAKE AN ENQUIRY or CALL 01322 629490
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