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Apprenticeship Levy Information for Employers

The government is committed to significantly increasing the quantity and quality of Apprenticeships in England and achieving 3 million starts by 2020.

What is the Apprenticeship Levy and who pays it?

In May 2017, Government funding for Apprenticeships is changing. An Apprenticeship Levy, a mandatory tax, will be 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 will be given more influence over how Apprenticeships are designed and paid for.
  • The Levy will come into effect on 1 May 2017, at a rate of 0.5% of pay bill, paid through PAYE. It applies to all employers in all sectors.
  • Employers in England who pay the Levy will be able to get out more than they pay into the Levy, through a 10% top-up to their digital accounts.

Accessing Levy funds to spend on training

  • Levy funds will be available through a new digital service DAS.
  • Levied employers will be 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 will be able to see their Levy contributions coming into the account monthly and accumulating over time.
  • Funds will first appear on account in late May 2017 after the employer has completed their RTI submission for April 2017.

How funds in the account will be calculated

To calculate how much each employer will have to spend through the English system, the SFA will 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 will be placed in a funding band

  • All existing and new Apprenticeship Frameworks and Standards will be 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)
  • 12 x £133 plus remainder £404 (20%)

Further information can be obtained from:
 https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work
 

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