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Apprenticeship Levy


The Apprenticeship Levy is the Government’s initiative to fund apprenticeships across the UK.

Businesses across the UK will be affected by the Apprenticeship Levy whether they realise it or not. Businesses with a payroll bill of over £3 million per annum will pay 0.5% of their wage bill into the Levy. Businesses who have a wage bill less than £3 million will be able to access funding based on the size of their company.

The Source has been working with employers across the UK since the Apprenticeship Reforms, including the Levy, came into force in April 2017.  We have helped hundreds of companies access funding to recruit new apprentices or upskill their current workforce using an apprenticeship.

These webpages will help you understand what the Apprenticeship Levy means for your business. Click on the links below to find out more:

Information about the Apprenticeship Levy

What you will pay

What you can spend funds on

Apprenticeship Levy Calculator

Digital Apprenticeship Service

Other links


Information about the Apprenticeship Levy

In the 2015 Summer Budget, the government announced its new initiative to help fund 3 million new apprenticeships by 2020. Since April 2017, the Apprenticeship Levy has been implemented to do just that.

The Apprenticeship Levy requires “all employers operating in the UK, with a pay bill over £3 million each year, to make an investment in apprenticeships”.

Employers who fall into this category pay 0.5% of their wage bill to the Apprenticeship Levy through their PAYE.

It is applicable to any UK business, in any sector.

The Levy will be deducted from your account monthly whenever your pay bill is above £250,000. If, at the end of the year, your pay bill is less than £3 million, any deductions will be reimbursed.

If you do not have a wage bill of £3 million or over, you will be able to access funding to support with your training. This is based on the size of your company.

More information about funding can be found in our Employer Guide which is accessible here.


What you will pay

What you will pay for training will differ depending on the size of your company and what your wage bill is. There are three different types of funding streams through the Apprenticeship Levy.

Employer with a salary bill of more than £3m

If your business has a salary bill of £3m or more, you will pay into the Levy. This means you will contribute 0.5% of your annual salary bill (over £3m) into the Apprenticeship Levy. You can use this money to train existing staff or recruit apprentices using funds in your digital account through the Digital Apprenticeship Service.

You will get more out than you put in. For every £1 that enters the digital account, you will get £1.10 back.

A salary bill of less than £3m with more than 50 staff

If your business has a salary bill less than £3m and more than 50 staff, you will contribute at least 5% of total training costs up to the funding band cap. You can use this funding to train existing staff or recruit apprentices.

You will also receive a £1000 cash incentive if you recruit an apprentice aged 16-18.

A salary bill of less than £3m with less than 50 staff

For smaller companies with a salary bill less than £3m and less than 50 staff, fully-funded training for 16 – 18 year olds and 19 – 24 year olds is available as long as the apprentice has an Education, Health and Care (EHC) plan. The business will be able to use this funding to train existing staff or recruit apprentices.

You will also receive a £1000 cash incentive if you recruit an apprentice aged 16-18.


Apprenticeship Levy Calculator

We have developed an Apprenticeship Levy calculator to help you see what contributions you may need to make. Find out more by clicking here.


What you can spend funds on

Funding through the Apprenticeship Levy can only be applied to activities related to an apprentice or apprenticeship being undertaken in your business.

 

What can be funded?

Funds can only be used for activity directly related to the apprenticeship as follows:

  • Off-the-job training, including mandatory qualifications (distance, online or blended learning)
  • Planned on-programme assessment and end-point assessment
  • Materials (non-capital) used in the delivery of the apprenticeship
  • Administration directly linked to the training or assessment, e.g. teaching materials, lesson planning, etc
  • Funding (within the cap) to re-take qualifications or endpoint assessments with additional learning needs
  • Accommodation costs for residential modules

 

What cannot be funded?

Funding cannot be used to cover the cost of the following:

  • Enrolment, induction, prior assessments, initial diagnostic testing or similar
  • Travel or apprentices’ wages
  • Personal protective equipment or safety equipment required by the apprentice
  • Off-the-job training delivered only by distance learning, optional modules or educational trips in excess of those required of the apprenticeship
  • English and maths up to level 2 (funded separately)
  • Re-sits for mandatory qualifications or end-point assessments for apprentices not requiring additional learning
  • Registration or examination costs for qualifications not listed in the apprenticeship standard
  • Capital purchases including lease agreements and maintenance
  • Time spent by employees supporting or mentoring apprentices, or specific services not associated with the delivery and administration of the apprenticeship

Digital Apprenticeship Service

The Digital Apprenticeship Service is an online portal which Levy paying businesses can access to manage their funds.

Once you have declared your levy to HMRC, you will be able to access funding for apprenticeships through a new Apprenticeship Service account. You can find out how to create an account on the Gov.uk website

Through the online Apprenticeship Service you will be able to:

  • Select an apprenticeship framework or standard
  • Choose the training provider or providers to deliver the training
  • Choose an assessment organisation
  • Post apprenticeship vacancies
  • Set the price agreed with your training provider
  • Pay for apprenticeship training and assessment
  • Stop or pause payments

You will need to create an account before your apprentice begins their apprenticeship with you. You will also need to know your learning provider’s UKPRN number so that funds can be paid to them directly. If you require help with this, please contact one of our Business Development Officers on 0114 263 5717.

It is important to note that unspent funds in your digital account will expire after 24 months.


Other Links

If you have further questions about apprenticeships, please use the links below to access information from the Government’s website.

Gov.uk

Apprenticeship Information

https://www.gov.uk/topic/further-education-skills/apprenticeships

Levy Information

https://www.gov.uk/guidance/pay-apprenticeship-levy

 

Institute for Apprenticeships

https://www.instituteforapprenticeships.org/

 

Digital Apprenticeship Service

Login

https://manage-apprenticeships.service.gov.uk/

How to Register

https://www.gov.uk/guidance/manage-apprenticeship-funds

 


If you’d like to find out more or discuss how the levy will work for your business, speak to one of our Business Development Officers.

Please call 0114 263 5717 or complete this form to request an appointment. 

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