APPRENTICESHIP LEVY

Apprenticeship funding explained

Getting to grips with apprenticeship funding and the system can be complicated, but we’ve got the knowledge and expertise to make this as simple and easy as possible for you. Let us help you realise the benefits of apprenticeships.

Having been delivering funded training programmes and apprenticeships for over 34 years, we know our stuff. So you can be confident that we have all the help and support you need. We can help you deliver fantastic results for your business and your workforce by inspiring talent, whether through one-off apprenticeship programmes, bespoke and tailored programmes or through our full end to end apprenticeship levy management solution.

Each apprenticeship programme is allocated to one of 30 different funding bands which are overseen and regularly reviewed by the Institute for Apprenticeships. Each funding band ranges from £1,500 to £27,000. This means that:

  • If you’re a large employer paying the levy, the upper limit of the funding band is the maximum amount of digital funds you can use towards an individual apprenticeship, or the government will contribute to if you have insufficient digital funds and are eligible for extra government support
  • If you’re a non-levy paying employer, the upper limit of the funding band sets the maximum price that the government will co-invest towards an individual apprenticeship

Some useful information and details about apprenticeship funding and how this works can be found through the following links:

The apprenticeship levy for large employers

Apprenticeship funding for non-levy paying employer

The apprenticeship levy explained

If you’re an employer with a payroll bill over £3 million each year you’ll be paying an apprenticeship levy of 0.5% via the HMRC PAYE. This levy can only be spent on apprenticeship training and assessment for those that work at least 50% of the time in England, but the payroll bill covers all staff working across the UK, including Scotland, Wales and Northern Ireland.

Things you should also be aware of if you are paying the levy:

  • You’ll only be able to use the levy up to the funding band maximum for the apprenticeship programme
  • If your training provider charges additional fees for services and or training, you will need to pay for this separately as it isn’t eligible for the levy
  • The levy cannot be used on things like wages, travel or setting up a programme.
  • Employers who are not connected to another company or charity will have an allowance of £15,000 each year, reducing the amount of levy you pay by £15,000 across the year
  • The money from the levy can only be accessed via an online digital account. You will need to set up and register for the apprenticeship service
  • The Education and Skills Funding Agency ‘top-up’ the online account with an additional 10% investment
  • The levy will accrue every month with any unused/unspent funds from the digital account being automatically carried over into the next month
  • If in any single month there are insufficient funds available in your digital account to meet the full costs of the apprenticeship training and assessment, you’ll need to co-invest 5% of the outstanding monthly balance, with the government paying the remainder
  • The government have set a time limit of 24 months to use the levy on apprenticeships before it expires. So, for example, the amount of levy paid into your digital account for the month of October 2019 will need to be used by October 2021 before it then expires. If you do not use the levy in this time the money is removed from your digital account
  • You can transfer up to 25% of the annual value of the levy funds to another employer to support apprenticeships. Employers in receipt of these funds need to take into account state aid rules

Top tip! There is a range of rules and guidance available from the Education and Skills Funding Agency which help to ensure that the apprenticeship levy is used correctly.

If you’re looking for support on how you can manage the apprenticeship levy and make sure the funding is used in the best way possible to support your future workforce talent, we are here to help. Whether it’s the delivery of apprenticeship programmes or help with managing and coordinating the use of the apprenticeship levy, we have the skills, expertise and experience you can trust.

Apprenticeship funding for non-levy paying employers

If you have an annual payroll bill of less than £3 million a year, you won’t have to pay the apprenticeship levy. Instead, the government will share the cost of apprenticeship training with you.

You’ll need to contribute 5% towards the cost of the apprenticeship programme with the remaining 95% paid by the government. This is called ‘co-investment’.

You could be eligible for extra funding depending on both you and your apprentice’s circumstances. 

For example:

  • If you take on a 16-18 year old on as an apprentice, you’ll receive £1,000 to help meet your extra costs.
  • If an apprentice who is aged 19-24 has previously been in care or who has a Local Authority Education, Health and Care plan, you will receive £1,000 to help with additional costs in the same way as the payment for 16-18 year olds.
  • Employers with fewer than 50 people working for them can train at no cost those aged 19-24 who have previously been in care or who have a Local Authority Education, Health and Care plan. These employers are not required to contribute the 5% co-investment; instead, the government will pay 100% of the training costs.

Interserve Learning & Employment has the expertise to help you through these complex funding rules. Our highly skilled team is ready and waiting to hear from you. We are able to guide you through the next stage of apprenticeship delivery whatever it is you’re interested in. Whether it’s the delivery of a bespoke apprenticeship programme or a one-off single apprentice, we have the expertise you can trust. We are inspiring talent every day.

Frequently asked questions

Who can deliver apprenticeships for my business?

All apprenticeship providers must have been quality checked by the Education Skills Funding Agency (ESFA) to meet a series of criteria including quality, finance, staffing and management. Only those providers who have been approved and are listed on the Register of Apprenticeship Training Provider list produced by the ESFA can deliver your apprenticeship programmes.

How do I choose the right apprenticeship provider?

With well over 2,000 different apprenticeship providers delivering training, selecting the right provider can often seem a complex and daunting challenge. However, selecting the right provider can be summarised into five simple but critical considerations that you should think about before committing to working with a provider:

  1. A strong track record – have a look at the provider and their history of delivery. Do they offer the quality of service you’d expect to see? Whether this an Ofsted rating, success rates of past performance or even experience of delivery
  2. Reputation – do learner and employer satisfaction rates indicate a strong commitment to success? Does the provider have a range of case studies or employer testimonials that shows their work? Is the provider a market leader with awards and nominations for their delivery?
  3. The geographical coverage to match your needs – Can the provider deliver the programmes you want and where you want?
  4. Cultural alignment – does the provider that you’re interested in working with match your own organisational culture? Perhaps share the same type of values and beliefs?
  5. Data management – can the provider robustly monitor and provide accurate reports of learner progress?
How can I find providers listed on the Register of Apprenticeship Training providers?

There are many different ways to identify a provider who is approved on the Register of Apprenticeship Training Providers (RoATP). Two simple ways would be to either look at the ESFA list (available here: https://download.apprenticeships.education.gov.uk/roatp) or, if you know what apprenticeship programme you would like to train apprentices in, you can search for the provider through the Find an Apprenticeship Service tool by clicking this link here https://findapprenticeshiptraining.apprenticeships.education.gov.uk/

Where do I go to access the levy funds and the government’s Apprenticeship Service to be able to start an apprentice?

All apprenticeship levy funds are accessed and managed through the ESFA’s Apprenticeship Service. You need to register and set up your account to be able to access the levy funds. Follow this link for further information: https://www.gov.uk/guidance/manage-apprenticeship-funds

How can I register for the Apprenticeship Service?

You can start to register for the Apprenticeship Service through the following link: https://accounts.manage-apprenticeships.service.gov.uk/service/index

Can I use the apprenticeship levy for any training I want?

You can only use the apprenticeship levy to fund the delivery of apprenticeship training. 

Does the apprenticeship levy have to be used for new recruits and apprentices?

No, you can use the funds in your apprenticeship service account to pay for the development and training of any apprentice. You can therefore offer apprenticeship training for anyone, whether a new recruit or an existing member of your workforce.

Can the government help me to access and use the apprenticeship levy?

The National Apprenticeship Service provide additional and impartial support and advice for employers looking to support apprenticeships. Follow this link for further information https://sfacontactforms.azurewebsites.net/employer-enquiry

How much does an apprenticeship cost?

Each individual apprenticeship programme is allocated to one of 30 different funding bands which are overseen and regularly reviewed by the Institute for Apprenticeships and Technical Education. Each funding band ranges from £1,500 to £27,000.  Therefore the cost of the apprenticeship depends on the programme that has been selected. Further details about the Institute for Apprenticeships and Technical Education can be found through here:  https://www.instituteforapprenticeships.org/

What happens if I can’t spend the levy that is being placed against my payroll bill?

Employers have 24 months to use their funds once it enters the apprenticeship service account. Any unspent levy funds after being in the account for 24 months will expire. So, for example, the amount of levy paid into your digital account for the month of January 2020 will need to be used by January 2022 before it then expires. If you do not use the levy in this time the money is removed from your digital account.

Employers can also support apprenticeship programmes in other organisations by transferring 25% of the annual value of funds entering the apprenticeship service account. These funds can be transferred to any employer, including smaller employers in your supply chain, and Apprenticeship Training Agencies (ATAs). Employers in receipt of these funds need to take into account state aid rules

You can see the annual transfer allowance in your apprenticeship service account.

More information about transferring funds can be found through this link: https://www.gov.uk/guidance/transferring-apprenticeship-service-funds

What happens if I want to spend more than the amount of funds in my apprenticeship account?

Should you find that you’ve used or are about to use all of your available funds, don’t worry. If in any single month there are insufficient funds available in your digital apprenticeship service account to meet the full costs of the apprenticeship training and assessment, you’ll need to co-invest 5% of the outstanding monthly balance, with the government paying the remaining 95%.

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