The Apprenticeship Levy can seem complicated, but don’t be daunted; we have a clear and simple guide to understanding what it is, how it works and how you utilise it.
This guide currently only applies to England. Click here for Apprenticeship Levy guidance for Scotland, Wales or Northern Ireland.
What is the Apprenticeship Levy?
The Apprenticeship Levy is a fund with employers at its heart. Every employer in the UK with a pay bill of £3 million or over, pays into the levy and then use the funds to hire apprentices. Simple!
The government set up the Levy to encourage more employers to hire apprentices and improve the quality of apprenticeships by putting business at the heart of the Apprenticeship system. This is achieved through the Trailblazer programme, in which employers work with the government to set Apprenticeship Standards. Find out more about how you could contribute to Apprenticeship Standards.
The funds in the Levy are only for use in the training and assessment of an apprentice, and do not cover any extra costs incurred in the hiring of an apprentice.
How Does the Apprenticeship Levy Work?
The Levy is co-funded by any UK employer, in any sector, with a pay bill of £3 million of more, and the government. Those eligible employers pay 0.5% of their pay bill, which is paid through PAYE. However, employers will have a £15,000 allowance to offset their levy payment. This is equivalent to 0.5% of £3 million, so if you are eligible, you are technically only paying the levy on the pay bill amount above £3 million.
For every pound added to the fund, the government will add an extra 10p to spend on apprenticeships. That means that if you have a pay bill of £4 million, you will have to pay £5,000 into the Apprenticeship Levy but will have £5,500 in your account to spend on apprenticeships.
How Do You Utilise the Apprenticeship Levy?
The unused funds in your Levy account will expire after 24 months, so make sure you start the process to hire an apprentice in that period.
Luckily, spending your Levy is all processed through the Digital Apprenticeship Service (DAS) website, where you will be able to select a registered training provider, set up your apprentices details and agree costs. So, all you have to do is set up your DAS account, agree details with an appropriate training provider and hire an apprentice. Easy!
When selecting a training provider, if you choose someone that charges more than the funding band limit, you will not be able to use your Levy account funds to cover the cost above that limit. To find out the funding bands for your Apprenticeship, search for the appropriate apprenticeship standard on the government’s website, within which you can view its funding band. Funding bands are government guidance to suggest how much they consider that training should cost. You can also see our dedicated funding advice for more information on the types of funds and assistance available to you as an employer.
Apprentice Levy Transfer Service
We provide a free matching service to help facilitate the transfer of your excess apprenticeship levy funds with ease and support other employers to provide additional training opportunities.
Need Support? We offer three support packages for those employers that require our expertise with transferring their excess Apprenticeship Levy. Or contact us to discuss further by phone 03458724501 or email info@employinganapprentice.com.
