Apprenticeship Levy Guidance
In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers in England. Click on the tabs below for further information for levy and non-levy paying employers.
If you would like any further information, please contact Dean Coleman-Walker on firstname.lastname@example.org or 07809 496643.
Levy Paying Businesses (1.5% of UK Businesses)
- From 5th April 2017, employers with a paybill over £3m will be charged a levy of 0.5% of their paybill.
- “Paybill” will be based on total employee earnings subject to Class 1 secondary NICs.
- The 0.5% levy is on your full UK payroll bill, not just the amount over £3m.
- The levy will be payable through Pay As You Earn (PAYE) alongside income tax and National Insurance.
- Payment will be taken monthly, in real time, meaning as your paybill changes each month, the levy amount taken will be reflected.
- HMRC will work closely with employers and providers of payroll services to minimise the burden of implementing these changes.
- Although the levy is calculated based on your full UK paybill, employers will only be able to only spend their English proportion on English apprenticeship training.
- The levy payment will then be ring-fenced in the form of an electronic voucher that can be used to purchase apprenticeship training, assessment and testing from recognised providers, from May 1st 2017 onwards.
- Funding caps for apprenticeships will be between £1,500 and £27,000.
- Un-used vouchers will expire on a first in, first out basis after 24 months.
- The government will apply a 10% top-up to monthly funds i.e. all funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value.
- Additional financial incentives are available for employing 16 – 18 year olds.
- Based on proposed funding rules, the levy can be used to fund existing employee development as long as they meet the criteria set out.
- The Government will co-invest 90% towards apprenticeships, if you have not got enough in your digital account. You will have to pay the remaining 10%.
The Skills Funding Agency have recently released a YouTube video, demonstrating the Digital Apprenticeship Service (DAS) portal that all levy payers will utilise when live. Click the video below to view.
Non-Levy Paying Businesses (98.5% of UK Businesses)
- Applicable to all UK businesses with an annual staff paybill of less than £3m.
- A new ‘co-investment’ structure will be required for all apprenticeship programmes.
- This means you will have to pay 10% of the cost of the apprenticeship programme, while the government pays the remaining 90%. (e.g. a £5,000 apprenticeship will require a £500 ‘co-investment’ from the employer).
- Your ‘co-investment’ cost is spread over the lifetime of the apprenticeship (e.g. 12 monthly payments for a Level 2 Business Administration Apprenticeship).
- The government will fully fund programmes if your business has 49 staff or less and you employ an apprentice aged 16 – 18 years old when they start.
- Every individual apprenticeship framework and standard will be allocated to a funding band.
- The upper limit of the funding band will cap the maximum price that government will ‘co-invest’ towards.
- Funding costs will be determined for eligible apprentices based on programme, age and prior qualifications.
- Additional financial incentives are available for employing 16 – 18 year olds (£1000 per apprentice).
- This is effective for any new apprentice starts from 1st May 2017.
- Any apprenticeship programme starts before 1st May 2017 will be on the existing funding rules.