• Employers looking for apprentices
  • Apprenticeships

The Apprenticeship Levy

The apprenticeship Levy will change the landscape of apprenticeships over coming years. From May 2017 the Levy will completely alter the way in which apprenticeships are funded and also realign the relationship and working practices between businesses and apprenticeship providers.

What is the Levy?

The Levy is applicable to all UK employers with a payroll over £3m per year and will apply to employers in all sectors including those that are already covered by the statutory levy (such as construction & engineering).

How Much Do Employers Have To Pay?

Employers Levy contributions will be 0.5% of payroll – all employers will receive a £15000 allowance to offset against payment of the Levy meaning only employers with a payroll greater than £3m will have to pay the levy.

Where multiple companies operate you will only be able to claim one allowance. This can be divided between the different companies. Payroll amounts will include all wages, bonuses, commissions and pension contributions on which NIC’s are due.

Employer A has a payroll of £2m per annum

  • Levy charge = 0.5% x £2m = £10,000
  • Less allowance of £15,000
  • Overall levy = £0 per annum

Employer B has a payroll of £35m per annum

  • Levy charge = 0.5% x £35m = £175,000
  • Less allowance of £15,000
  • Overall levy = £160,000 per annum

How Do I Pay The Levy?

The Apprenticeship levy will be collected on a monthly basis alongside Tax and National Insurance through pay as you Earn (PAYE). You will have a £15000.00 allowance that works out to £1250.00 per month.

This means that if your levy liability in a month is less than this amount you wont have to make a payment. Any unused allowance will be carried forwards until it is used.

If the reverse is true, and you find that you have made levy payments, but not used all of your allowance you will be given a credit that you can offset against other PAYE liabilities.

At the end of the tax year HRMC will operate a rebate system to make sure that you pay the right amount of levy.

Accessing Your Levy Funds

You will be able to manage your Levy through an account with the new Digital Apprenticeship Service (DAS) and it will allow you to:

  • See the levy funds you have available to spend in England
  • Forecast your funding requirements
  • Select apprenticeship frameworks and / or standards you want to use
  • Confirm the training provider(s) you want to use to deliver your apprentices’ training
  • Confirm the price you’ve agreed with your training provider
  • Pay for apprenticeship training and assessment
  • Choose an assessment organisation
  • Post apprenticeship vacancies

The government will top up your levy by an additional 10%. This top up will be applied to all monthly funds deposited into your account meaning if your overall levy is £160,000 per annum the government will top this up giving you a total of £176,000 in total to spend.

Spending My Apprenticeship Levy Funds

When you choose which approved training provider you want to work with, the Digital Apprenticeship Service will send the funding direct to them.

You will negotiate a rate for an apprenticeship with your training provider up to a maximum funding cap (this varies depending on the type of apprenticeship you are accessing).

The Levy can be used to covert any direct costs incurred associated with the apprenticeship training including:

  • apprenticeship training and assessment
  • against an approved framework or standard
  • with an approved training provider and assessment organisation
  • up to the funding band maximum for that apprenticeship

You can use your Levy to train as many apprentices as you like and should you wish to exceed your Levy pot the government are promising to fund 90% of training costs if you pay 10% which is a very attractive option for many companies to develop their workforce.

Your Apprenticeship Levy funds will expire 24 months after they appear in your digital account if they are not spent on apprenticeship training and whilst this offers a good period of time you should consider and fully understand the lead time that is often the case to set up and activate an apprenticeship programme.

There are several different options open to businesses in relation to who specifically they spend their Levy money on:

  • You could start employing apprentices for the first time or increase the number of apprentices that you already employ
  • You can assess your current staffing teams and seek to identify any skills gaps – apprenticeships can then be layered over existing roles to support staff development with your existing teams
  • You can leave your Levy payments to expire and pay the Levy as you would any other Tax

What Training Providers To Use?

You can select your on choice of training provider from the approved providers list on the Digital Apprenticeship Service – providers have had to complete a thorough examination of performance and financial health to gain approval on to the RoATP (Register of Approved Training Providers).

Why Choose SSG Training?

As a local and independent provider, we specialise in the following apprenticeship areas because we have experienced members of staff who have real understanding of the industry areas we deliver apprenticeships within.

Our emphasis is on ensuring our apprenticeship delivery allows your apprentice(s) to remain on site and in sync with their working environment and requirements.

We do this by ensuring our apprentice assessors develop a strong working relationship with not only the apprentices but also you as an employer.