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What is the apprenticeship levy?
An apprenticeship levy is a government plan to increase the amount of apprenticeships on offer in the UK. Both public and private UK employers will be taxed 0.5% of their payroll and will receive £15,000 to off set this levy payment.
When was the apprenticeship levy introduced?
It was introduced in April 2017. Apprentices who started before May 2017 will continue previous funding arrangements. A new funding system (including the levy) began in May 2017.
It was introduced to help the government reach their target in 3 million apprenticeships by 2020.
What can the apprenticeship levy funds pay for?
It can pay for apprenticeship training and assessment. They can’t pay for apprentices’ wages, travel costs, managerial costs, work placements, statutory licences to practise, trainee-ships, or the cost of setting up an apprenticeship programme.
Who has to pay the apprenticeship levy?
The levy only affects businesses with annual payroll in excess of £3 million – less than 2% of UK businesses have to pay.
What if my business doesn’t have to pay the levy?
You’ll still receive support from the government for hiring and training apprenticeships. You just need to agree a payment plan with a provider and pay 10% of the course costs. The other 90% is paid by the government (co-investment). The maximum cost varies depending on the apprenticeship and which of the 30 funding bands the apprenticeship falls into.
Are there extra incentives for small businesses?
If you are a business with less than 50 employees, then the government will pay the full cost for apprenticeships for 16-18 year olds. For those 19 and over, the government will pay 90% of the cost.
The government will also cover all costs for employing apprentices aged 19-24 from disadvantaged backgrounds or with additional learning needs.
Are there additional incentives?
Employers are given an extra £1,000 for taking on an apprentice between 16-18. An extra £1,000 is also available for employing apprentices aged 19-24 from disadvantaged backgrounds or with additional learning needs.
What will happen to existing levies?
Employers paying existing schemes will still have to pay the apprenticeship levy. Industry Training Boards are consulting members and considering changes that might be needed to change their current levy arrangements.
How will payments be made?
Payments will be made to HM Revenue and Customs (HMRC) each month through PAYE real time information (RTI). 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.
What if I want to spend more than the apprenticeship levy covers?
You just pay 10% of the course costs and the other 90% is paid by the government.
Do levy funds apprenticeship run out?
Funds will expire after 24 months.
How much do apprenticeships cost?
You need to agree this with the training provider but the cost varies depending on the apprenticeship and which of the 30 funding bands the apprenticeship you choose falls into. Apprenticeships can range from £1,000 to £27,000. For example:
- LEVEL 2 CUSTOMER SERVICE: £4,000
- LEVEL 3 ENGINEERING MACHINISTS: £21,000
- LEVEL 3 ACCOUNTING: £9,000
- LEVEL 5 MANAGEMENT: £9,000
How much do I need to pay an apprentice?
Employers are required to pay apprentices the national minimum wage. The apprenticeship rate is currently £3.90 per hour and applies to those 19 and under or those who are in their first year.
Who provides the training?
You will select the training provider. If you are accessing funds through co-investment, you can only spend the levy with an approved provider. You can get help to choose an apprenticeship and provider online at https://findapprenticeshiptraining.apprenticeships.education.gov.uk/
How long do apprenticeships last?
That depends on the apprenticeship. All apprenticeships have a minimum of 12 months but some can take longer. For example: level 2 apprenticeships could take 12 months but level 5 apprenticeships may take up to 24 months.
You may also want to progress your apprentice through different levels. For example: accounting apprentices often move from level 2 through to level 4.
What age do apprentices have to be?
They can be any age. Older employees, even those with degrees, can also take up apprenticeships if they have been provided with new roles or require new knowledge or skills.
Employers are given an extra £1,000 for taking on an apprentice between 16-18. An extra £1,000 is also available for employing apprentices aged 19-24 from disadvantaged backgrounds or with additional learning needs.
Can the apprenticeship levy be used for existing employees?
Yes, the levy can be used for new or existing staff.
What happens if an apprentice requires help with Maths and English?
The government will pay the full cost for level 1 and 2 Maths and English training.
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