The Apprenticeship Levy came into effect on 6 April 2017 and is part of the Government's plan to increase the quantity and quality of Apprenticeships.

 

The Levy is a new tax which aims to help towards the Goverment's target of three million new Apprenticeships in England by 2020.

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Will all organisations need to pay the Levy?

From 6th April 2017, all public and private sector employers in the UK with a staff pay bill over £3 million per year are required to pay the mandatory Apprenticeship Levy which is 0.5% of their pay bill.

All employers have an allowance of £15,000 to offset against levy costs, so no levy will be paid on the first £3 million of payroll costs. The levy is paid to HMRC via each company’s PAYE scheme.

The Government estimate that only 2% of UK employers will come into scope for the levy and that it will generate £3bn by 2020, which will be ring fenced for the funding of apprenticeship delivery.

 

How will the Government collect the Levy?

Payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), alongside tax and national insurance.

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What happens to the money once it has been paid?

The money will be collected by HMRC and for apprenticeship training in England will be accessed via a new Digital Apprenticeship Service (DAS) account. You will be able to use this to pay for your apprentice training.

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What can Levy be spent on?

When an Apprenticeship has started, monthly payments will be automatically taken from your digital account and sent to the training provider. This spreads the cost over the lifetime of the apprenticeship. You will see funds entering your digital account each month as you pay the Levy, and funds leaving the account regularly each month as you pay for training.

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How do I get out more than I put into the Levy?

Employers in England who pay the Levy will get a 10% top-up to their digital accounts. This means every £1 will be increased to £1.10.

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How long will my vouchers last?

Funds will expire 24 months after they enter your digital account unless you spend them on apprenticeship training. Money is spent when it leaves your digital account as a payment to the training provider.

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Under what circumstances will I have to pay more?

There are two circumstances where Levy-paying employers are likely to have to contribute more:

• Where the cost of the training you wish to buy for is greater than the funding cap for a particular standard or framework

• Where your organisation has spent all your Levy contribution and top-up and wants to spend more on Apprenticeship training.

 

Non Levy Information

Under 50 Employees

• 16-18yrs will be fully funded by the Government and there will be a £1,000 incentive.

• 19yrs+ will require an employer contribution of 5% and the £1,000 incentive will only apply for care leavers or learners that hold an EHC plan.

 

Over 50 employees

• 16-18yrs will require an employer contribution of 5% and there will be a  £1,000 incentive.

• 19yrs+ will require an employer contribution of 5% and the £1,000 incentive will only apply for care leavers or learners that hold an EHC plan.

 

Apprenticeship funding: how it will work?

Funding is available via the Education and Skills Funding Agency for learners from 16 years and upwards throughout England.