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Make The Most Of Your Apprenticeship Levy

Apprenticeship Training in Business Administration, Customer Services, Retail & Hospitality

Museum Employees

Know the facts about Levy​

The Apprenticeship Levy was introduced in 2017 and research suggests that organisations have been slow to invest their Levy funds in apprenticeships.

A total of £1.8bn in Levy payments had been made in 2018/19 since its introduction, however organisations had withdrawn just £108m.

Levy funds remain in your National Apprenticeship Service account for a maximum of 24 months, so from April 2019, you may have started to lose funding that could be used to up-skill your new and existing employees.

Will there be any exemptions from the Levy?

All employers with a payroll bill of over £3m, on which there is a liability to pay secondary Class 1 National Insurance Contributions (NICs), will be required to pay the Apprenticeship Levy. There will be no exemptions.

Top-ups to the funds in your digital account

The Government will apply a 10% top-up to the funds you have for spending on apprenticeship training in England. That means you will receive £1.10 for every £1 that enters your digital account to spend in England on apprenticeship training.

Apprenticeships for SMEs

Employers with a payroll bill of less than £3m will not pay the levy. The government will provide financial support for non-levy paying employers to take on apprenticeships, however, employers are expected to make a small financial contribution of 10% of the cost of training and assessment in partnership with the Government.

How do I access the Apprenticeship Levy funding?

Funds will be accessed through a new digital apprenticeship service account. You will need to register to create an account and link it to your PAYE schemes. You will be able to see funds appear in your digital account on a monthly basis. You will be able to use this to pay for training and assessment for apprentices in England. The service will also help you find training providers and assessment organisations.

Is there a time limit on Levy funds?

Yes. The levy funds will expire 24 months after they enter an employer’s digital apprenticeship service account unless they are spent on apprenticeship training. This will also apply to any top-ups in the account. Expiration will take place automatically, but your digital apprenticeship service account will inform you in good time when any funds are due to expire so that the funds can be spent.

The main facts about the Apprenticeship Levy

  • Employers with a UK payroll bill of over £3m per annum will pay an Apprenticeship Levy at a rate of 0.5% of their total wage bill with effect from April 2017.

  • If the payroll bill is less than £3m per annum, they will not pay the levy, however can claim government funding towards their apprenticeship training on approved courses subject to employer and apprentice eligibility.

  • Organisations will pay the levy regardless of whether or not they subsequently reclaim the funding available to invest in apprenticeship training.

  • The levy will be paid monthly through ‘Pay As You Earn’.

  • Employers will receive an allowance for each apprentice and be able to use their levy contributions to fund external training with an approved training provider, such as L&F Training.

  • Employers in England who pay the levy and maximise their apprenticeship training may be able to ‘get out more than they pay’ through a top-up to their digital accounts.

  • The levy payment will be ring-fenced in the form of an electronic voucher (digital account) that can be used to purchase training from approved training providers.

  • The levy will give you more control of apprenticeship funding to encourage you to employ more apprentices, or up-skill your existing workforce.

  • Apprenticeship targets have been set for both public and private sector organisations.

Levy Paying To Non-Levy Paying

Example 1: Levy paying employer

Employer of 250 employees, each with a gross salary of £20,000 would pay:

Pay bill: 250 x £20,000 = £5,000,000
Levy Sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 - £15,000 = £10,000 annual levy payment

Example 2: Non-Levy paying employer

Employer of 100 employees, each with a gross salary of £20,000 would pay:

Pay bill: 100 x £20,000 = £2,000,000
Levy Sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 - £15,000 = £0 annual levy payment

Employer Responsibilities

As an employee, apprentices are entitled to the same benefits as any other employee. When employing an apprentice, there are certain requirements that need to be adhered to.

The requirements are:

  • Apprenticeship National Minimum Wage = £4.30 as of April 2021.

  • Issuing a Contract of Employment.

  • Minimum Hours of Employment: Apprentices should work at least 30 hours per week, although we recognise that this may be greater; should also include 20% off-the-job training either in the work place or with a training provider.

  • New Apprenticeship Agreements are required to include a “Commitment Statement” this will need to be signed by the employer and apprentice

For additional and up-to-date information, please visit aelp or the official government website.

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