What is the apprenticeship levy?
The Apprenticeship Levy is a tax on employers which is used to fund training and development through apprenticeships.
The Levy was introduced by the Government in April 2017 with the aim of increasing the number of apprenticeships on offer in companies across the UK.
The Levy is an amount paid at 0.5% of an employer’s annual pay bill. Levy-paying employers will have to pay this tax regardless of whether they employ an apprentice.
Apprenticeship Levy Information
Who is required to pay the Levy?
The Levy is an amount paid at a rate of 0.5% of an employer’s annual pay bill. As an employer in the UK, you will either be a ‘levy-payer’ or a ‘non-levy payer’.
You will be a levy-payer, and will have to pay the apprenticeship levy each month if you:
- have an annual pay bill of more than £3 million
- are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million
I am a Levy-paying employer, what do I need to do?
The levy and allowance due is calculated and collected monthly as part of the HMRC RTI Return. Employers who pay the Levy receive a 10% contribution from the Government each month.
You can manage your apprenticeship funds on your Apprenticeship Service Account. Through the account you will be able to pay for training and assessment.
You should note that there is a deadline on levy funds. If a business does not spend the levy funds in their digital account within 24 months they will expire, and the remaining funds transfer back to the Government.
I am a non-levy paying employer, what do I need to do?
SME’s who do not pay the Levy will need to reserve funds for apprenticeship training. You can reserve funds in the finance section of your Apprenticeship Service Account.
As an SME, you may need to make a 5% contribution to the cost of apprenticeship training. The Government will pay the remaining 95%, up to the maximum amount for the apprenticeship funding band for the chosen apprenticeship.
Currently, apprenticeships for 16 – 18-year-olds are fully funded for SME’s with less than 50 employees.
How can I spend my Apprenticeship Levy?
Levy funds can only be used towards the costs of apprenticeship training and assessments with an approved training provider. It can be used to hire new staff or to train existing employees.
Levy funds can only be used to pay for training, assessment and for new apprenticeship starts. This means alongside a new hire, funds can be spent on training for existing employees.
Funds cannot be spent on the following:
- Travel, or accommodation for apprentices
- Uniform and equipment
- Training outside of an apprenticeship
To view the latest apprenticeship funding rules, click here: https://www.gov.uk/guidance/apprenticeship-funding-rules
Donate your Levy
Large employers can transfer unused apprenticeship funds to another business to pay for their apprenticeship training and assessment. Employers can transfer a maximum of 25% of your previous years levy funds.
Transferring funds is a way of supporting other businesses in specific sectors, skills or local areas. For instance, you could support the engineering sector in Greater Birmingham. You can choose the business you transfer your funds to, but they will need an apprenticeship service account to receive funds.
You should note, a transfer of levy funds is not a one-off payment. It is a commitment to pay for a specific apprenticeship over the course of its duration and until its completion.
How can I transfer levy funds?
You can transfer levy funds using your apprenticeship service account.
There are 2 ways to transfer:
Pledge and transfer levy funds so other business can apply to you for funding
Make a transfer to a business you know by inviting them to make a connection
For help in transferring your levy then contact us
Receive a Levy donation
Apprenticeships can be funded by levy paying employers transferring up to 25% of their unused funds to a separate employer.
These funds will be used to pay for training and assessment costs of apprenticeships.
For help in receiving a levy then contact us
GBSLEP Skills Hub
Employers may decide to transfer their levy to specific sectors, businesses or particular levels of apprenticeships.
GBSLEP Skills Hub support employer’s one-on-one, to design and develop a bespoke plan for training and recruitment, bringing all the expertise and support services that are available in our area.
Each employer can have their training needs analysed and a unique skills plan developed that will identify appropriate programmes and provision in a focused package of support to purely meet their needs.
To have a free training need analysis click here
How do I apply for a transfer?
You will apply for a transfer using your apprenticeship service account.
Before logging into your account, you need to:
Know which apprenticeship standard your apprentices are undertaking
Know how many apprentices you need funding for
Know the location of where your apprentice will be working from
Know the expected apprentice start date
Once you have applied for a transfer, you can monitor the status of your application in your apprenticeship service account.