Funding/Levy

The levy will be paid by employers with a pay bill of over £3 million from April 2017. Pay bill includes wages, bonuses, commissions and pension contributions.

Once employers have declared the levy to HMRC they will be able to access funding for apprenticeships through their account on the digital apprenticeship service. Employers need to register for an account and HMRC will work out what proportion of each employer’s pay bill is paid to employees living in England for each PAYE scheme.

Employers will also benefit from a 10% top up to monthly funds entering an account.

Levy funds expire 24 months after they appear in their digital account unless they are used on apprenticeship training. This will also apply to the 10% top up they receive on the monthly funds entering an account. The oldest funds in the account will always be used first.

If, in any single month, a levy-paying employer has insufficient funds available in their digital account to meet the full costs of training and assessment, they will need to co-invest 5% of the remaining balance, with government paying the remainder. All employers will need to meet, in full, any costs above the funding band limit for any particular apprenticeship.

There is a single test for whether apprenticeship training can be funded through the English system: that is, whether the apprentice’s workplace, which is their main place of employment, is in England.

Scotland, Wales and Northern Ireland have their own arrangements.

Employers who do not pay the levy (less than £3m annual pay bill) will benefit from significant government funding to support their commitment to apprenticeships. They will have to make a financial contribution called ‘co-investment’.

These employers will be required to co-invest 5% and will benefit from government funding to cover the remaining 95% of the cost.

Employers with fewer than 50 people working for them will be able to train all 16 to 18 year olds (and 19 to 24 year old apprentices who have previously been in care or who have a Local Authority Education, Health and Care plan) without making a contribution towards the costs of training and assessment.