Apprenticeship Levy

Apprenticeship Levy

Introduction

The government has set out its vision for Apprenticeships until the year 2020 which includes the introduction of an Apprenticeship Levy. The Apprenticeship Levy will drive engagement by larger employers in high-quality Apprenticeships, a drive which we believe strongly will positively impact on:

  • the prospects of sustained employment and progression for an individual’s career
  • bottom-line productivity returns for employers
  • the economic health of the nation through an enhanced skills base

When will the levy begin?

It will be collected on a monthly basis, from April 5th 2017. 

Levy payments will therefore be available for expenditure from the new Digital Apprenticeship Service (DAS) from mid-May 2017.

The new funding rules surrounding the levy will come into force from May 1st 2017. All Apprenticeships that start prior to this day will do so on the current system, and will retain that system through to completion. No part of levy funding can be used by employers or providers to pay for anything related to Apprenticeships that commenced prior to May 5th 2017.

After this date the new funding system, rules and regulations will apply to all starts on both frameworks and standards.

Who will the Levy apply to?

The Levy will be calculated on 0.5% of the payroll bill of all employees across the whole of the UK including Scotland, Wales and Northern Ireland. However there will be a £15,000 allowance for Levy payers meaning that employers with a payroll bill of less than £3m will not pay the Levy at all.

How will it work?

Levy payers will be able to use the funds in their DAS account to pay for costs related to the training and assessment of their own employed Apprentices.

Levy funding can only be used for the funding of training towards Apprenticeships of workers who place of work is primarily designated as being in England. It cannot be used for any other purpose, including paying Apprentice wages nor for initial assessments and/or diagnostics.

The employer will pay the tax and their DAS account will be credited with that amount for a period of 24 months. The government will apply a 10% top-up to monthly funds entering levy payers digital accounts. Employers will then be able to use the funds in the account for up to that amount to pay a provider or providers of choice for the cost of the apprenticeship training and assessment. Funds will stay “live” for two years from payment, after which they can no longer be accessed for use in Apprenticeship funding.

How much can be drawn down for each apprentice?

All Apprenticeship standards and frameworks will be allotted to one of 15 bands that specify the maximum amount of public money available to be used against its cost.

The draft bandings that have been announced are:

Number

Band Upper Limit

1

£1,500 

2

£2,000

3

£2,500

4

£3,000

5

£3,500

6

£4,000

7

£5,000

8

£6,000

9

£9,000

10

£12,000

11

£15,000

12

£18,000

13

£21,000

14

£24,000

15

£27,000

 

The bands above DO NOT include any required provision for English and maths training and qualifications up to and including Level 2. Maths and English provision to Level 2 is priced at a flat rate of £471 for at least the first year. This funding is drawn by the provider through the Individualised Learning Return (ILR) mechanism.

Payments for learning support for Apprentices are also not included in the above caps.

Will the employers paying the Levy have to pay any further contributions?

If their levy accounts have been exhausted, they will pay 10% of the cost of training. If the cost of training exceeds the banding for that particular standard or framework, the employer must pay the full amount of the excess balance.

Over what period can Levy contributions be spent?

Levy contributions made in any tax year remain in scope for expenditure by the contributing company for 24 months – for example, Levy contributions made in April 2017 will remain live until March 2019, a period of 24 months. 

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