What is the Apprenticeship Levy?

The apprenticeship levy is a form of taxation designed to help companies offer more apprenticeships. It was originally introduced to benefit businesses by boosting essential training and developing apprenticeship programmes. It is known as the levy.

The levy can only be used within England, as apprenticeship legislation differs across the devolved nations. For this reason, apprentices funded by the levy must work at least 50% of their time within England. The amount of levy a business can access is directly linked to the proportion of their employees living in England.

How much funding is available?

For levy-paying businesses, (those with an annual wage bill over £3m) , 100% of the cost is paid from your levy.  After you have used all of your levy pot, you are required to pay 5% of the cost and the government pays 95%.  If you have used all of your levy pot, then you pay about £16 per learner per month.  There is no limit on the number of learners you can have on programme.

For non-levy-paying businesses, (annual wage bill under £3m), the government pays 95% of the cost and you pay 5%.  This equates to you paying £16 per month per learner with the Government paying the rest.  These programmes normally cost between £4,000 and £9,000.

Unlevied employers can use the levy through a transfer of funds from a levy-paying employer.  An organisation can transfer up to 25% of its annual levy fund to another business, for example, a company in its supply chain. This can be a great way to develop business relationships or give something back to the community.

How does it work?

HMRC collect 0.5% of payroll monthly.

Funds collected are credited to employers’ online ‘levy account’.

Companies recruit apprentices and/or ask existing employees to undertake apprenticeship training.

Employers engage with one or more approved training providers.

Employers set up their Digital Apprenticships Account (DAS) with their approved training provider to pay for the training.

This is of course a very brief overview of the changing world of apprenticeship funding. We work with each business during the engagement process to ensure they understand the implications of levy funding on their business and how to navigate the system in more detail.

Click the infographics below to enlarge:

Summary

The levy is a tax paid by employers:

• It applies to those with a payroll of more than £3 million
• It is used to fund apprenticeship training
• Levy is charged at 0.5% of an employer’s total payroll, collected monthly through PAYE
• After 24 months, unused levy funds expire and return to the government

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