CAPITAL 4 TRAININGThe
Apprenticeship
Levy

CAPITAL 4 TRAININGThe
Apprenticeship
Levy

The Apprenticeship Levy

The Apprenticeship Levy

The Apprenticeship Levy is part of three changes in law aimed at increasing the number of Apprentices as part of the Government’s commitment to have three million Apprentices. As well as the Apprenticeship Levy the Government is also:

  • Implementing, as part of the Enterprise bill, a requirement on all Public Sector Organisations to have 2.3% of their total staffing headcount as Apprentices.
  • Implementing the abolition of National Insurance employer contributions for Apprentices aged under 25 from April 2016.

The Apprenticeship Levy aims to fund three million Apprentices in the UK by 2020. Any organisation with a payroll in excess of £3 million per year will be subject to a 0.5% levy on all staff costs over the £3m. The amount paid (monthly) will be transferred to a digital account controlled by the said employer. This fund is used for Apprenticeship training.

The Digital Account

You are able to register and create an account via the digital apprenticeship service. After a few working days after the payment is confirmed and as a result the funds will appear in the digital account. You are then able to use your levy funds to pay for apprenticeship training and assessments. Furthermore all organisations will receive a £15,000 offset allowance, as well as a monthly top up of 10% from the SFA (Skills Funding Agency) as the levy funds appear in the account.

If the levy fund does not cover the full cost of the apprenticeship training then as a result, the government can provide the extra financial support. However the levy fund (including top ups) will expire after 24 months. As a result, any unused funds will roll over from one month to the next. The account works on an automatic first-in, first-out basis. As a result, this ensures that previous funds (inc. top ups) are used first to minimise expired funds.

Spending the levy funds
Some facts on paying the apprenticeship levy:
  • Employers who pay the levy and provide apprenticeships will be able to allocate their levy contributions through the Digital Apprenticeship Service, as a result making it easier to train their apprentices.
  • Employers will have 24 months to spend their levy funding (contributions and any government top-ups, if eligible).
  • Digital Apprenticeship Service funds will cover apprenticeship training, assessment and certification with registered providers only. It will not cover wages or other costs.
  • You will not be able to use the levy to fund other professional training courses or programmes.
  • From 2018 levy payers will be allowed to transfer up to 10% of their annual levy fund value to other employers on the digital apprenticeship system for example, a Supply chain.
Facts For levy payers (over £3 million)
You may be interested to know that…
    • Apprenticeship Levy took effect during April 2017.
    • The levy is paid on employers’ total wage bill in excess of £3m.
    • The levy is a 0.5% tax of wage bill, paid through PAYE.
    • Levy paying employers will benefit from a 10% top up of their levy funds each month.
    • The Public sector bodies will also have the levy applied, and an additional target to ensure that 2.3% of the workforce consists of apprenticeships.
    • The levy payments are managed by the digital apprenticeship service.
    • An allowance of £15,000 is granted to offset against the employers’ levy payments.
Employer example

For Instance, Employers of 250 employees, each with a gross salary of £20,000
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
Government top up: £25000 + 10% = £27,500 total available to spend on training

Facts for non-levy payers (under £3 million)
If you don’t pay into the apprenticeship levy…
  • If you don’t pay into the apprenticeship levy…

    • Firms with wage bills under £3 million, and therefore not contributing to the levy, won’t have access to the levy fund.
    • However, businesses not paying the levy will be able to access government support for apprenticeships.
    • The government propose a co-investment rate for apprenticeship funding. Non levy paying employers will be required to pay 5% of the training costs and as a result, the government will pay the remaining 95%.
    • Small employers with less than 50 employees may be exempt from paying for apprenticeship training and non-levy payers may also receive a further incentive of £1,000 for training apprentices:
      • aged 16-18
      • 19-24 year old care leaver
      • 19-24 years of age and has a Local Authority Education, Health and Care plan.
Employer example

For Instance, Employers of 100 employees, each with a gross salary of £20,000.
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

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“Education is the key to success in life, and teachers make a lasting impact in the lives of their students.”

Capital 4 Training explains the Apprenticeship levy, from what it is, to how it’s spent, for more information, contact Capital 4 Training - The best training Provider in Newcastle
SOLOMON ORTIZ

“Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.”

Capital 4 Training explains the Apprenticeship levy, from what it is, to how it’s spent, for more information, contact Capital 4 Training - The best training Provider in Newcastle
KOFI ANNAN

“An investment in knowledge pays the best interest.”

Capital 4 Training explains the Apprenticeship levy, from what it is, to how it’s spent, for more information, contact Capital 4 Training - The best training Provider in Newcastle
BENJAMIN FRANKLIN

“The learning process continues until the day you die.”

Capital 4 Training explains the Apprenticeship levy, from what it is, to how it’s spent, for more information, contact Capital 4 Training - The best training Provider in Newcastle
KIRK DOUGLAS

The
Apprenticeship
Levy

The apprenticeship levy is a UK tax on employers which is used to fund apprenticeship training. Your business will automatically pay into the scheme if you have a wage bill of over £3 million at a rate of 0.5% of your company's total wage bill.

Take a look at our courses by clicking below.

The
Apprenticeship
Levy

The apprenticeship levy is a UK tax on employers which is used to fund apprenticeship training. Your business will automatically pay into the scheme if you have a wage bill of over £3 million at a rate of 0.5% of your company's total wage bill.

Take a look at our courses by clicking below.

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