What is the Apprenticeship Levy and who pays it?
Government funding for Apprenticeships has changed. An Apprenticeship Levy, a mandatory tax, was introduced for all employers with a wage bill that exceeds £3 million.
- Levy on UK employers will fund growth in the Apprenticeship programme. In parallel, employers have been given more influence over how Apprenticeships are designed and paid for.
- The Levy (0.5% of pay bill) is paid through PAYE. It applies to all employers in all sectors.
- Employers in England who pay the Levy are able to get out more than they pay into the Levy, through a 10% top-up to their digital accounts.
Non-Levy Payers
If your company has a payroll of under £3 million, you are not required to pay the Apprenticeship Levy but may be entitled to funding towards the cost of apprenticeship training. You may only need to fund 10% of the cost of training, with the government funding the remaining 90%.
More information can be found in the Non-Levy Payers Toolkit, or you can contact us to discuss further.
Benefit of Apprenticeships
The government is committed to significantly increasing the quantity and quality of Apprenticeships in England and achieving 3 million starts by 2020.
| BENEFITS TO BUSINESS |
|---|
| Apprentices complete their Apprenticeship with highly marketable skills... |
| ...that make it more likely for them to remain employed, including with the same employer |
| Employers experience tangible improvements to their product or service as a result of Apprenticeships |
| Apprenticeships create real benefits for the taxpayer and the wider economy... |
| ...and contribute to the Government's overall goal of improving labour market outcomes |
Levy Payers - Further information
Accessing Levy funds to spend on training
- Levy funds are available through the digital service DAS.
- Levied employers are able to select their PAYE schemes and access available funds.
- This will allow employers with multiple PAYE schemes and connected companies to aggregate Levy funds into one account.
- Employers are able to see their Levy contributions coming into the account monthly and accumulating over time.
- Funds will appear on account after the employer has completed their RTI submission each month.
How funds in the account will be calculated
To calculate how much each employer has to spend through the English system, the SFA use data that HMRC already hold.
- Employers will benefit from a 10% government top up to monthly funds entering an account.
- Funds will expire in 24 months.
Purchasing training
Digital funds and government funding can be used for:
- Apprenticeship training and assessment
- Against an approved framework or standard
- With an approved training provider and assessment organisation
- Up to the funding band maximum for that Apprenticeship
Digital funds and government funding cannot be used for:
- Wages
- Travel and subsistence costs
- Managerial costs
- Traineeships
- Work placement programmes
- The costs of setting up an Apprenticeship programme
Provisional funding bands
Every Apprenticeship is placed in a funding band
-
All existing and new Apprenticeship Frameworks and Standards are placed within one of these funding bands (upper limits)
Employers can negotiate with providers the best price for the training they require.
Payments
- Example: Accounting Framework L2 (Band 2)
- 2 x £133 plus remainder £404 (20%)
| Number | Band Width |
|---|---|
| 1 | £1,500 |
| 2 | £2,000 |
| 3 | £2,500 |
| 4 | £3,000 |
| 5 | £3,500 |
| 6 | £4,000 |
| 7 | £5,000 |
| 8 | £6,000 |
| 9 | £9,000 |
| 10 | £12,000 |
| 11 | £15,000 |
| 12 | £18,000 |
| 13 | £21,000 |
| 14 | £24,000 |
| 15 | £27,000 |
| 5 Step Guide to the Digital Apprenticeship Service | ||
|---|---|---|
| 1 | Plan your Apprenticeship | Estimate how much funding you will have to spend |
| 2 | Choose Apprenticeship training and assessment |
Find the right type of Apprenticeship for your business
|
| 3 | Advertise a vacancy to recruit an Apprentice |
Work with your training provider to post your vacancy
|
| 4 | Manage the funding for your Apprenticeship |
Register securely to set up an employer account to:
|
| 5 | Start a new Apprenticeship contract |
|
Further information can be obtained from:
https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work
If you would prefer to talk through your options and the process involved, please don’t hesitate to contact the Employer Services Team on 01737 788316 or employerservices@esc.ac.uk.
Address: East Surrey College, Gatton Point, London Road, Redhill, Surrey RH1 2JX
Main Switchboard: 01737 772611 / Client Services: 01737 788444 / Email: clientservices@esc.ac.uk
