In April 2017 the way the government funds apprenticeships in England changed. The levy is a new tax which aims to fund three million new apprenticeships in England by 2020. Employers who pay the apprenticeship levy can use their levy funds on apprentice training for existing staff or new recruits.
Who will pay the apprenticeship levy?
- As of April 2017 an apprenticeship tax levy of 0.5% is in place, to be paid by employers with a wage bill in excess of £3 million per annum.
- Non-levy paying employers (i.e. those whose wage bill is less than £3 million per annum) will be expected to pay a contribution to help fund their apprenticeship training. The government will pay 90% of the negotiated rate on condition of the employer paying 10%.
- Employers will choose and pay for apprentices’ training and assessment through the online Apprenticeship Service (AS).
Apprenticeship levy payers FAQs
Training for existing staff or new recruits. It cannot be used on associated costs such as apprentice wages or travel.
All UK employers who have a total wage bill in excess of £3 million a year pay the levy. The levy rate is set at 0.5% of your wage bill offset by a levy allowance of £15,000.
Employer A: £10m annual payroll
Levy charge (0.5% x £10m) = £50,000
Less allowance £15,000
Overall levy = £35,000 per annum
Employer B: £3m annual payroll
Levy charge (0.5% x £3m) = £15,000
Less allowance £15,000
Overall levy = £0 per annum
Payments will be collected monthly by HM Revenue & Customs (HMRC) through Pay as You Earn (PAYE), alongside your organisation’s tax and national insurance. The funds will then appear as digital vouchers on your Apprenticeship Service (AS) Account.
The Apprenticeship Service (AS) is a new online tool for apprenticeships. On your AS account you will be able to use your digital vouchers to choose the training provider you want to deliver your apprenticeship training and choose who will conduct the end-point assessment.
Our Business Development Team will be able to help you set up your AS account. Contact us at firstname.lastname@example.org or call us on 01234 291747.
From May 2017 you will see funds entering your AS account each month as you pay your levy. Monthly payment will then be taken from your AS account and sent to the training provider you choose to deliver the training of your apprentices.
You will be able to choose who you want to deliver your apprenticeship programme though the Apprenticeship Service using your digital vouchers. Bedford College is the largest provider of apprenticeships in Bedfordshire so choosing us to deliver your apprenticeship training will mean that…
- You will receive a free tailored recruitment service that meets your needs.
- You will be given expert advice by our Business Development Team.
- Your apprentices will be trained by tutors who have all previously worked in the relevant industry sector.
- Your apprentices will have their own dedicated Training Co-ordinator to support them through their training.
All employers that have a wage bill less than £3 million per annum (which represents 98% of UK employers) will not have to pay the levy and will continue to have access to government funding to support their apprentice training. However, going forward non-levy paying employers will be expected to make a financial contribution to the cost of training their apprentices (co-investment).
The employer will need to co-invest 10% of the agreed price and the government will pay the remaining 90%. For small employers (fewer than 50 employees) who take on younger apprentices (aged 16-18) the government will pay 100% of the apprenticeship costs.
Any employer who takes on a 16-18 year old apprentice will receive a £1,000 incentive