The Apprenticeship Levy

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Employers Guide to the Apprenticeship levy

Find out how the Levy will affect your business

The Apprenticeship Levy was introduced in April 2017.

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What is the Apprenticeship Levy?

In April 2017 the government changed the way Apprenticeships are funded. A new scheme was be introduced, known as The Apprenticeship Levy. Employers with a £3M payroll will have to pay the levy. The funding for all businesses, including SMEs has changed.

The government have introduced the Apprenticeship Levy to improve the quality and quantity of Apprenticeships in England; to bridge the skills gap affecting many industries and to provide a sustainable workforce.


How is my business affected?

Employers with a £3M+ payroll

Non-Levy Paying Employers | Small & Medium Sized Enterprises (SME’s)


Apprenticeship Levy FAQ

What happens if your organisation runs more than one payroll?

Employers who operate multiple payrolls will only be able to claim one allowance for the levy.

How much of the Apprenticeship Levy will you pay?

Example:

Employer with 1,000 employees, each with a gross salary of £20,000
Annual pay bill: 1,000 x £20,000 = £20,000,000
Levy applied: 0.5% x £20,000,000 = £100,000

After allowance applied: £100,000-£15,000 means £85,000 levy payment

How will the government collect the levy?

Payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), alongside tax and National Insurance.

What are the penalties for non-payment?

There will be the same time limits, penalties and appeal procedures as income tax non-payment.

What happens to the money once it’s paid?

The money will be collected by HMRC and for Apprenticeship training in England will be accessed via a new Digital Apprenticeship Service (DAS) account.

How will I draw down from the levy fund?

In England, you’ll need to register your details online, along with the details of your apprentice. You’ll be able to see how much can be drawn down for each apprentice in the form of the voucher. You can then use these vouchers to spend on training with registered training organisations from late May 2017.

What are the likely funding caps?

You will not be able to spend an unlimited amount of money on a single apprentice. Funding caps will limit the amount of levy funds you can spend on training for an individual apprentice. The cap will vary according to the level and type of Apprenticeship. For example, more expensive, higher quality training is likely to have a higher cap.

What can the levy can be spent on?

You can spend your levy funds on apprentice training for either existing staff or new recruits as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria.

What types of programmes can be funded by the Apprenticeship levy?

A range of Apprenticeship training programmes can be funded. They must be provided to an approved Apprenticeship standard. Read the government’s full list of Apprenticeship standards.

What can Apprenticeship funding be spent on?

Funds can only be used towards the costs of Apprenticeship training.

They cannot be used on other associated costs such as:

How do I use funds from my digital account to buy training?

When an apprenticeship has started, monthly payments will be automatically taken from your digital account and sent to us, the training provider. This spreads the cost over the lifetime of the apprenticeship. You will see funds entering your digital account each month as you pay the levy, and funds leaving the account regularly each month as you pay for training.

Can I direct my levy funds to someone else?

Initially, in the first year of the levy, you will only be able to pay for the apprenticeship training of your own employees. The government is still assessing the options of some employers directing levy funds to other organisations.

How do I get out more than I put in to the levy?

Employers in England who pay the levy will get a 10% top up to their digital accounts. This means every £1 will be increased to £1.10.

How long will my vouchers last?

Funding vouchers will expire 18 months after they enter your digital account unless you spend them on apprenticeship training. Money is spent when it leaves your digital account as a payment to a training provider.

Under what circumstances will I have to pay more?

There are two circumstances where levy-paying employers are likely to have to contribute more:

How will the government fund Apprenticeships which start before the levy is introduced?

We understand Apprenticeships which start before the first levy payment is taken (April 2017) will continue to be funded for their full duration under the current model.

Apprenticeship funding is provided through the Skills Finding Agency (SFA), and the size of the contribution varies depending on the sector and the age of the apprentice.

Funding is available for public and private sector employers. The training contribution is paid to the organisation which trains the apprentice. If you are a small business, this will be a training provider. Large employers with a direct training contract can receive training funding themselves or appoint a training provider to deliver training on their behalf.

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Business Vacancy Support & Apprenticeship Levy Enquiries

Shantelle Watts ShantelleWatts@skillsforgrowth.org.uk

Tanya Hodson TanyaHodson@skillsforgrowth.org.uk

Chelsea Spencer ChelseaSpencer@skillsforgrowth.org.uk


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