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Apprenticeship Levy Explained

In 2017 the Government introduced the Apprenticeship Levy to create long term sustainable funding for apprenticeships; giving businesses more control to provide their staff with a range of training opportunities. There is now more money available than ever before for apprenticeship training – allowing employers to take on apprentices and upskill their existing workforce.

Some Interesting Facts:

  • By 2019/20 the funding available for investment in apprenticeships in England had risen to over £2.5 billion, double what was spent in 2010/11.

  • Since the Apprenticeship Levy was introduced 4 years ago, businesses have been able to support almost 313,000 staff to start their apprenticeship journey.

  • Currently only 2% of employers pay the apprenticeship levy, but this funding has helped directly support almost 50% of all apprenticeships in 2017/18.

1. What is the Apprenticeship Levy & how does it work?

Any employer with a pay bill of over £3 million will pay an apprenticeship levy. The levy is charged at 0.5% of an employer's payroll. It is collected monthly through PAYE. Each employer will have an annual levy allowance of £15,000 (being 0.5% of £3 million) to offset against the levy they must pay.

You can use your apprenticeship levy to cover the training costs of any approved apprenticeship standard. This could be to recruit new employees into your team, or to put existing employees onto an apprenticeship as a training and development opportunity. It can't be used towards wages, travel costs, equipment etc. 

2. The Apprenticeship Levy & SMEs

Employers with a wage bill less than £3 million (usually businesses with under 50 members of PAYE staff) do not have to pay the Apprenticeship Levy. However, these businesses are able to access funding for up to 10 apprentices with the government contributing 95% towards the cost of Apprenticeship training.

To find out more about funding apprenticeships, please visit our recent blog post: http://www.wtpn.org.uk/take-5-apprenticeship-funding-explained

3. The Apprenticeship Service (TAS)

To manage Apprenticeship Levy payments and see how much is currently in your levy pot, employers must register for an online account via the Government’s apprenticeship service website, also known as TAS. Information on how to set up an online account can be found on their website: https://www.gov.uk/guidance/manage-apprenticeship-funds

4. What happens to unspent Apprenticeship Levy funds?

Employers have 2 years (24 months) to use their funds once they enter their apprenticeship service account. After this point, any unused funds will expire. The funds expire to encourage larger levy paying employers to invest in high-quality training, and to prevent levy payers from accruing too much. However, any unspent levy funds within each financial year can be used to support apprentices to complete their training. Alternatively, up to 25% of a business’s unspent levy can be gifted to an SME to cover their training costs. This is known as ‘levy-share’.

5. What can we do if we have used up our Apprenticeship levy funds?

If your business pays the levy but the funds in your pot don't cover the full cost of the apprentice's training, the government will offer support. The government will pay 95% of the apprenticeship training costs (up to the maximum of the relevant funding band) - with you as the employer ‘co-investing’ 5%.

6. The Apprenticeship Levy ‘Share to Support’ Scheme - Use your levy funds to drive local impact

Our team run the Share to Support levy transfer scheme, in partnership with The West of England Combined Authority. We can help you use any of your unspent levy to support the recovery and growth of local small businesses. This could be businesses in your supply chain, or that tie into your corporate responsibility objectives. You can find out more here: Share to Support Scheme. 

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