MORE THAN JUST AN APPRETICESHIP PROVIDER!
The government announced in the 2015 Summer Budget its new initiative to help fund 3 million apprenticeships by 2020. A part of that initiative was the Apprenticeship Levy which came into effect in April 2017 ‒ this has changed the way apprenticeships are funded.
Levy paying employers
The Apprenticeship Levy requires; “All employers operating in the UK, with a pay bill over £3 million each year, to make an investment in apprenticeships.” But what does this mean?
What is the Apprenticeship Levy?
The Apprenticeship Levy is a payroll tax and it replaces all other taxpayer funding towards apprenticeships. From April 2017 employers pay 0.5% of their wage bill to the levy through their PAYE. It is applicable to any UK business, in any sector, which has a payroll bill of over £3 million per tax year. It is deducted monthly and will be taken in any month where an employer’s pay bill is above £250,000 and if at the end of the year, it is less than £3 million, any deductions will be reimbursed. The good news is businesses in England who pay into the levy will receive more than they pay in – they will receive a 10% monthly top up into their digital account.
Paying the LevyAll businesses receive an “offset allowance” of £15,000 – this is a lot like your personal allowance where you don’t pay up to the value of £15,000. This is equivalent to 0.5% of a payroll of £3m; therefore, any business with a payroll greater than £3m pays the levy.
Using your levy payments
Good news! If you pay into the levy you get to use that money to train your staff. Levy payments can only be used to fund apprenticeships across your organisation. These can be new members of staff or you could have people you already employ who may be eligible to gain an apprenticeship qualification.
Funds can be used for:
Apprenticeship training and assessment with an approved training and assessment provider.
Funds cannot be used for:
Wages, travel and subsidiary, traineeships, management
costs, work placements, set up costs.
Unspent funds in an employer’s digital account will expire after 24 months.
How can you benefit?
For every £1 paid in by a levy paying employer, the government adds a 10% additional top-up to be spent on training and assessment of apprenticeships. You will receive the funds direct into your digital accounts (for apprenticeship training in England) from May 2017.
Levy-paying employers use the Apprenticeship Service to access their funds and pay for their training and assessments. Registration became available from January 2017 and the first time any funds will be available in the account from April 2017. New apprentices can begin their training / upskilling from May 2017.
The Apprenticeship Service will help to:
- Plan your apprenticeship programme.
- Choose you apprenticeship training and assessment provider.
- Manage your funding for apprenticeships.
- Post apprenticeship vacancies.