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30-05-2017 by 














If your organisation needs support with the Apprenticeship Levy then please contact our dedicated Business Support Team. You can call Tanya or Shantelle on 020 8221 0500 or email BusinessSupport@skillsforgrowth.org.uk

Latest details on the Apprenticeship Levy here:

The government has set out its vision for Apprenticeships until the year 2020 which includes the introduction of an Apprenticeship Levy. 

What is the apprenticeship levy?

The levy is set at 0.5% of payroll per annum. It will be collected on a monthly basis, based on ‘live’ HMRC payroll data from 5th April 2017, bringing into scope all directly employed employees but not contractors, including all payments made through payrolls but not ‘benefits’. It will be applied to ‘groups’ of companies but not franchisees. According to the above regulations companies should ‘make provision for the due date of the Apprenticeship levy to be by the 19th (or 22nd if you report electronically) of the following month. Levy pay6ments will therefore be available for expenditure from the new Digital Apprenticeship Service (DAS) from mid-May 2017.

The new funding rules surrounding the levy came into force from 1st May 2017. All Apprenticeships that started prior to this day will remain on the previous system of funding through to completion. No part of levy funding can be used by employers or providers to pay for anything related to Apprenticeships that commenced prior to 5th May 2017. After this date the new funding system, rules and regulations are applied to all starts on both frameworks and standards.

HMRC will set out the rules and will collect the Levy: draft regulations are now available at: https://www.gov.uk/government/publications/draft-legislation-regulations-for-the-calculation-payment-and-recovery-of-the-apprenticehip-levy

Who will the Levy apply to?

The Levy will be calculated on 0.5% of the payroll bill of all employees across the whole of the UK including Scotland, Wales and Northern Ireland. However there will be a £15,000 de minimis allowance meaning that employers with a payroll bill of less than £3M will not pay the Levy at all. In very broad terms this means that employers with around 150 reasonably paid employees will pay a Levy.

How will it work?

Levy funding can only be used for the funding of training towards Apprenticeships. It cannot be used for any other purpose, including payment Apprentice wages nor for initial assessments and/or diagnostics.

In at least the first yer there will be two systems of payment for Levy and non-Levy payers. Levy payers will be able to use the funds in t heir levy account – recorded and monitored using The apprenticeship Service (TAS) online – to pay for costs related to the training and assessment of their own employed Apprentices.

If the levy account is exhausted at any time, the employer will move to the ‘co-investment’ model used for non0levy paying employers until such time as the levy account is sufficient to cover the payments being drawn on it in any one month.

Levy-paying employers

The employer will pay the levy each month, and the TAS account will be credited with that amount for a period of 24 months following. The government will apply a 10% top-up to monthly funds entering levy payers digital accounts. Employers will then be able to use the funds in the account for up to that amount to pay a provider or providers of choice for the cost of the apprenticeship training and assessment. Funds will stay ‘live’ for two years from payment, after which they can no longer be accessed for use in Apprenticeship funding.     

Non levy-paying employers (co-investment model)

Non levy paying employer s- and levy payers who have exhausted their levy accounts at any time when payments are due – can access further Apprenticeships via co-investment. Under this, employers will contribute 10% of the negotiated price and the provider will draw the remaining 90% from the public purse. Note that the employer co-investment must be a transfer of funding visible in the provider’s financial systems. This will typically be in the form of a provider invoice and corresponding employer payment.

In at least the first year of operation, levy funding can only be used to train Apprentices with the levy-paying company itself. In subsequent years it is anticipated that employers may also be allowed to spend or transfer some of their levy payments credits to other employers in their supply chain.

How much can be drawn down for each apprentice?

All Apprenticeship standards and frameworks will be allotted to one of 15 bands that specify the maximum government contribution available. Actual prices will be negotiated between the employer and provider. Prices for training may exceed the cap, but any excess balance must be met in full by the employer – levy funding cannot be used for this purpose.

  • For levied employers, this means that the total negotiated price up to the banding cap would be covered by the TAS (assuming sufficient funds are available) – beyond that figure, the employer must pay 100% of any excess. If for example, a Band 1 price is negotiated at £1500, then £1500 would be deducted from the TAS over the period of the Apprenticeship and the employer pays nothing more. If the price was negotiated at £1600, then the maximum government contribution within Band 1 that can be deducted from the TAS remains at £1500 and the employer must pay the excess £100 themselves.  
  • For non-levied employers, the band cap represents the total negotiated price upon which the government will pay a 90% subsidy. If for example, a Band 1 price is negotiated at £1500, then the employer will pay 10% (£150) and the Education and Skills Funding Agency (ESFA) will meet the balance of 90% (£1350). If however the price negotiated is £1600, then the maximum government contribution within Band 1 remains capped at £1350, and the employer must pay the outstanding £250.

The bandings are:


Band Upper Limit
































The bandings refer to negotiated prices between employers and providers for training and assessment costs only. The DO NOT include any required provision for English and maths training and qualifications up to and including Level 2 which are met by the ESFA and which are priced at a flat rate of £471 for at least the first year. This funding is drawn by the provider through the Individualised Learning Return (ILR) mechanism.

Similarly, funding for learner support (eg £150/month basic support) is also not deducted from the levied employer’s TAS account but is paid via the ILR; in the case of delivery to non-levied employers, it is however taken from the allocation given to the provider by the ESFA. In neither case should figures for learning support be included as part of the calculations of total cost, which should relate to training and assessment only.

Will the employers paying the Levy have to pay any further contributions?

Where levy accounts have been exhausted or are insufficient to cover the costs committed from it, employers will pay 10% of the cost of training each month above the amount available in the TAS, until such time as it is in sufficient credit to cover the whole required balance. If the cost of training exceeds the banding for that particular standard or framework, the employer must pay the full amount of the excess balance. 

Will there be any incentive to recruit 16-18 year olds?

16-18 year old Apprentices at employer with headcounts of 50 or less are fully funded at the maximum banding price, in which case no contribution from either the levy account or the employer is required. Additionally, all 16-18 year old Apprentices (and those aged 19-24 with an ECH or who are care leavers) will attract an additional payment of £1000 to BOTH the employer and the provider.

Over what period can Levy contributions be spent?

Levy contributions remain in scope for expenditure by the contributing company on apprenticeship training and assessment for a period of 24 months – for example, Levy contributions made in April 2017 will remain live until March 2019, a period of 24 months. Funds will be expended in the order in which they are paid, maximising the amount of time they are ‘live’.



TAS = The Apprenticeship Service


ESFA   = Education & Skills Funding Agency https://www.gov.uk/government/organisations/education-and-skills-funding-agency


Useful links:

Government webpage giving overview of levy and its functioning


Apprenticeships (in England): vision for 2020


Apprenticeship trailblazers evaluation: final report


Register to manage your apprenticeship funds


Digital apprenticeship service demonstration






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