The Apprentice Levy
Any firm wanting to recruit an apprentice has to be registered with the scheme, even if not paying into it. But what is it?
The Apprentice Levy was introduced in April 2017. The Apprenticeship Levy will be a levy on UK employers to fund new apprenticeships.
In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. The levy will be charged at a rate of 0.5% of an employer’s paybill. Each employer will receive an allowance of £15,000 to offset against their levy payment.
The levy will only be paid by businesses with annual paybills in excess of £3 million, and so less than 2% of UK employers will pay it.
Levy-paying employers can now transfer up to 50% of their funds to support apprenticeships in other businesses.
It is expected that the levy will support productivity growth through the increase in training. It may have a near-term impact in reducing earnings growth, although by supporting increased productivity, it is expected that the levy will lead to increased profitability for businesses, and increased wages over the long-term.
A levy-paying employer can create an account on the apprenticeship service to receive levy funds for them to spend on apprenticeships, manage their apprentices, pay their training provider and stop or pause payments to their training provider.
Non-levy paying employers
Non-levy paying employers share the cost of training and assessing their apprentices with government – this is called ‘co-investment’. From May 2017, businesses pay 5% towards to the cost of apprenticeship training and government will pay the rest (95%), up to the funding band maximum.
However, SME employers who do not pay the levy no longer have to contribute to the cost of apprenticeship training for 16–21-year-olds – government is fully funding the training costs for these individuals.
A business will need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that they have paid their contributions as a condition of government paying its contribution.
If you have any questions, contact the Apprenticeship employer helpline at nationalhelpdesk@apprenticeships.gov.uk
