The Apprenticeship Levy

The apprenticeship levy is a tax which will be paid monthly at the rate of 0.5% of an employer’s pay bill (on which there is a liability to pay secondary Class 1 NICS). It will be collected via PAYE and is only payable on pay bills over £3 million.

The levy has been introduced to fund a step change in apprenticeship numbers and quality and to help deliver the Government’s commitment to 3 million additional apprenticeship starts by 2020.

The levy came into force in April 2017.

The levy will be paid by all employers operating in the UK.

The levy can be spent from May 2017 when the payments will start to be visible in the digital Accounts. 

An employer’s pay bill is based on total employee earnings subject to Class 1 secondary National Insurance Contributions (NICs), but includes earnings below as well as above the secondary threshold. Earnings include any remuneration or profit derived from employment which includes wages, bonuses, commissions and pension contributions that you pay NICs on. The levy will not be charged on benefits in kind or other things subject to Class 1A NICs.

Employers will have an allowance of £15,000 which means that the levy is only applicable on pay bills over £3 million. See examples below.

Guidance on how to pay the Apprenticeship Levy

Guidance on Apprenticeship Funding Estimate My Apprenticeship Funding

Are you ready to maximise the Apprenticeship Levy? Key things you need to know
When you have to pay Apprenticeship Levy and how to report your payments (GOV.UK) 
Employer Guidance Video (YouTube)
A step-by-step guide to the apprenticeship service

If a group of employers are connected they will only be able to use one £15000 allowance.

Employers access their funds through their digital apprenticeship service account.

Apprenticeships are a devolved policy and the Apprenticeship Service will support the English apprenticeship system. Scotland, Wales and Northern Ireland will have their own arrangements for supporting employers to access and pay for apprenticeships.

Funds in an employer’s levy account can only be used towards the cost of apprenticeship training and the end point assessment an apprentice needs to take.

For the first year of the levy employers can only use the funds in their levy account to pay for apprenticeship training and assessment for their own employees.

The Government will apply a 10% top up to monthly funds entering levy paying employers digital accounts – every £1 paid by an employer will be increased to £1.10 in value.

Levy funds, and top ups, will expire 24 months after they enter the digital account unless they are spent on apprenticeship training.

Levy funds can only be spent up to the funding bands on an individual apprentice.

If the cost of apprenticeship training agreed by a provider and employer are greater than the funding band for an apprenticeship the levy amount will need to be topped up by the employer.

If employers pay the levy and their payments and top ups aren’t enough to cover the full cost of the apprenticeship training and assessment that they’d like to buy, the Government will support the additional cost by utilising the same rate of co-investment as for employers who don’t pay the levy.

Other funding support will be provided for 16-18 year olds, young people who are aged 19-24 who have been in the care of the Local Authority, apprentices with additional learning needs, and apprentices who don’t have the level of English and maths that is required to meet the minimum standard.

If employers already pay levies in the construction and engineering sectors they will not be exempt from the apprenticeship levy.

Employers who already have apprentices on programmes prior to April 2017 will continue to be supported under the terms and conditions that were in place at the time their apprenticeship started.

There will be no exemptions from paying the levy from public sector organisations.

West Suffolk College staff are available to carry out Training and Skills Needs Analysis.

We can act as the Lead Provider and deal with any bureaucracy connected to the recruitment of apprentices and advise on the most suitable training programmes. West Suffolk College is here to guide you through all of your apprenticeship queries and ensure the best possible training for your workforce.

Find out more about the apprenticeship levy on GOV.UK.
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