What is the Apprenticeship Levy?
An Apprenticeship is an excellent opportunity for a business to attract and retain fresh thinking talent and plug specific skills gaps, whilst enabling a student to gain valuable experience and develop specific skills suited to their chosen career.
To support the Government’s growth and reform programme to increase the quality and quantity of Apprenticeships across the UK, the Government introduced the Apprenticeship Levy, which is a tax on UK employers with a wage bill of over £3 million pounds per annum. These funds are invested to support the development and delivery of the apprenticeship programme and grow quality vocational training and employment.
Understanding the Levy
The Apprenticeship Levy is a tax on all UK employers that supports the funding of apprenticeships. It applies to companies which pay more than £3 million annual pay bill. Companies pay 0.5% of their pay bill directly into a fund, the government then adds an extra 10% to the fund.
By introducing the Apprenticeship levy, the Government is increasing apprenticeship funding. These funds will help to create sustainable, targeted apprenticeships enabling you to build a strong framework in which to deliver valuable quality training and development.
It only applies to businesses who pay out more than £3 million per year on their pay bills. If you are over this threshold you will have to contribute to the levy through PAYE every month. Each employer also gets £15,000 to offset against their levy payment.
If you were to take on an apprentice, 95% of the funding/training costs will be paid by the government. You will need to pay 5% towards any costs for apprentices who are aged 19 or over.
Yes you can, so long as the training meets an approved apprenticeship standard, the training provided allows your employee to acquire substantive new skills and the content of the training is materially different from any prior training or a previous apprenticeship.
This same rule applies for employers seeking to put employees on an equivalent or a lower level qualification than that they have already achieve.
Payments are managed through an online Digital Apprenticeship Account – similar to online banking.
Once you have an account you will be able to:
- receive levy funds to spend on apprenticeships
- manage your apprentices
- pay your training provider
- stop or pause payments to your training provider
Funds will expire 24 months after they enter an employer’s digital account unless they are spent on apprenticeship training. This will also apply to any top-ups.