Changes to the Apprenticeship Levy

10% Contribution to be halved

The 10% funding that non-levy paying employers have to make towards the cost of an apprenticeship programme has been reduced to 5%. The reduction offers companies with a payroll below £3m a greater incentive to recruit new apprentices or re-train current employees. All apprentices that started before 1st April 2019 will still continue to pay the 10% co-investment.

25% Levy Donations

Organisations that do pay the levy can now donate up to 25% of their Levy to small and medium sized enterprises (SMEs) to support funding their own apprentices. There are no restrictions on the number of companies that levy paying organisations can support, only that they do not exceed 25% of the levy.

Withdrawal of the Apprenticeship Levy Funds

Levy paying organisations will begin to lose unused funds from April 2019. It has been 2 years since the levy was introduced, which means that un-utilised funds will start to be withdrawn and given back to the government. To prevent levy being lost, companies need to act quick and use up their funds.

How to Spend the Apprenticeship Levy Funds

Levy funds are spent on the training and assessment of an apprentice on an approved Apprenticeship standard or framework. They can’t pay for apprentices’ wages, travel costs, managerial costs, work placements, statutory licences to practise, traineeships, or the cost of setting up an apprenticeship programme.

Funds are accessed through a digital apprenticeship service, or DAS account that employers are provided with when signing up an apprentice. This account links to PAYE schemes. Digital vouchers are used to claim levy contributions. Employers can use these vouchers to pay for training apprentices. Businesses are also required to calculate and report what they owe each month. If the business overpays at any point, HMRC will refund you in PAYE credit.

Overall, these changes allow companies to invest more into their workforce and develop new talent. If you need help to spend levy funds or have any questions, contact us via the contact page for a quick response. Learn more about the apprenticeship levy here.