What is the Apprenticeship Levy?
The apprenticeship levy is a mandatory tax payable by employers which is equal to 0.5% of their gross payroll bill across the whole of the UK per year. Any employer with a payroll total in excess of £3 million will have to pay the levy which can then be used on apprenticeship training. You can find out how much you will have to pay here. The first payment will be taken on 6th April.
- The levy is intended to fund 3 million new apprenticeships by 2020.
- It is equal to 0.5% of the gross payroll bill and there is a £15,000 allowance paid back to each company by the government meaning the levy will only apply to those with a payroll of more than £3 million.
- Funds will be tracked on the new Digital Apprenticeship Service.
- The first levy payments will be taken on the 6th April 2017.
- You will be able to use your levy contributions on apprenticeship training, assessment and certification in the form of digital vouchers, which are topped up by 10% by the Government.
- Public sector organisations (as classified under ONS) with a headcount of 250 or more must strive to have apprenticeship starts accounting for 2.3% of their staff.
- Employers who do not have to pay the levy will pay for apprenticeship training under a co-investment scheme where the Government pays 90% and the employer pays 10%. This system will not be conducted on the Digital Apprenticeship Service until much later.
Will I have to pay the levy?
Any employer with a UK payroll in excess of £3 million will have to pay the levy. There is a £15,000 allowance paid back to each business by the Government so anyone whose 0.5% levy is less than £15,000 (i.e. those with a payroll of £3 million or less) will not have to pay it.
How do I work out how much I will have to pay?
There is a tool to calculate how much your levy will be here
You can also work it out manually:
(Payroll in £ x 0.005) - £15,000 = Levy payment in £
What will happen if I do not have to pay the levy?
Any company with a wage bill of less than £3 million will not have to pay the levy and therefore will not have access to a levy fund. Instead, these organisations will pay the training provider directly. The Government will co-invest 90% of the cost of the training and the employer will contribute 10%. In the future, it is intended that this process will move to the Digital Apprenticeship Service.
How do I access the levy?
The levy will be accessed using an online system called the Digital Apprenticeship Service (DAS). The levy contributions will be converted into digital vouchers which will appear in your account and include a 10% top-up from the Government, so for every £1 taken for the levy the Government will add an additional 10p.
What can I use the levy on?
The levy can be used exclusively for apprenticeship training and assessment. Each apprenticeship has been assigned to a funding band which limits the amount of digital funds which can be used for that apprenticeship or which the Government will co-invest in the case of non-levy paying employers or if a levy payer has exhausted their levy funds. There are 15 funding bands ranging £1,500-£27,000 which are dependent on sector, job and level, and employers will need to negotiate with the training provider directly to decide on the cost of training. You can find full details of funding bands here.
What can the levy not be used for?
The levy cannot be used for anything aside from apprenticeship training and assessment. This includes the apprentice’s salary, any travel costs, any professional certification or registration where not included in the Standard or Framework, safety equipment or enrolment costs, among others. The levy also does not count towards Functional Skills training costs. Functional Skills in Maths and English are funded by the Government directly to the provider at a cost of £471 per qualification. Any ICT qualifications will have to be funded directly from the employer.
Who qualifies for apprenticeship training?
The training can be given to new recruits or to existing staff but the individual must:
- Be over 16 years of age.
- Be in a genuine job with a genuine job waiting at the end of the apprenticeship.
- Spend at least 50% of their working hours in England (with exceptions made in the case of the armed forces and those whose occupation involves significant travel outside of the UK and have a registered work location in England).
- Be a UK or EEA citizen, or have the Right of Abode in the UK and have been resident in the EEA for the previous three years, or be a non-EEA citizen with permission to live in the UK and have resided in the UK for the previous three years.
What kind of training is available?
Apprenticeship Standards are replacing the existing Frameworks and are being developed by Trailblazers (small groups of employers representative of the sector). They are tailored around specific job roles in a huge variety of sectors and industries and range in levels from a GCSE-equivalent Level 2 up to a Master’s-standard Level 7. For our list of courses please see our Apprenticeship page.
Does the training have to be at a higher level to any qualifications the recruit or staff member currently holds?
No, under the new regulations the apprentice can study at the same or lower level to any qualifications or apprenticeships they have already done as long as the apprenticeship will allow them to gain substantive new skills and is materially different from any qualification or apprenticeship they have done before.
How long will I have to spend my levy funds?
Levy funds will expire 24 months after they have been transferred into the digital account. You will be given warning when you have funds due to expire. This was extended from the original proposal of 18 months to allow employers to adapt to the new system and allow development of more Standards to be finalised.
Am I limited by the levy in the number of apprentices I can take on?
Once an employer has exhausted the funds in their levy account, any additional training will be funded under the same guidelines that non-levy payers will use. This means the employer will need to invest 10% of the training costs directly to the training provider with the Government investing the other 90%.
Can I transfer my funds to other employers and apprenticeship training agencies?
Not at the moment. There are plans to allow up to 10% of the levy fund to be transferred to other accounts but this is unlikely to be introduced until 2018. It is currently under development by a group of employers aided by detailed research. They will decide how transfers will work, the level of the funds allowed to be transferred and what other controls need to be in place.
Are there any incentives for taking on certain apprentices?
An additional payment towards training costs will be given to the employer for any apprentice who is:
- 16-18 years old
- 19-24 years old and formerly in care or with an Education, Health and Care plan.
This is expected to be transitional only and will be reduced as time goes on and more apprentices are studying under the Standards.
What else do public sector organisations need to know?
On the 20th January 2017 a document was released detailing the 2.3% apprenticeship starts target. The Government is asking that public sector bodies aim for an average of 2.3% of their employees (by headcount, including temp staff) to be apprenticeship starts. These can be new recruits or existing staff members undergoing apprenticeship training. It will be measured in financial years beginning in 2017/18 and ending in 2020/21 and each organisation will need to give a detailed report on their achievement of the target. If the target is not reached, the Government will work closely with the organisation in question to develop their apprenticeship programme for the future.
What can CWC do for me?
As more information is released we can send out updates and offer advice about the levy and the new Apprenticeship Standards to businesses of any size. As a Government-approved training provider with a proven track-record of excellence, we would love to discuss your training needs with you and help you move towards an apprenticeship-focused future.