The way that apprentices are funded in the UK is changing in May 2017 and the new apprentice levy will affect employers in all sectors whose annual payroll is in excess of £3 million.
Although less than 2% of UK employers will pay the levy, if you’re an employer with a pay bill
of over £3 million each year, you must pay the apprenticeship levy from 6 April 2017.
The levy will be charged at a rate of 0.5% of an employer’s pay bill. Each employer will receive an allowance of £15,000 to offset against their levy payment.
If you are a levy-paying employer, you can now create an account on the apprenticeship service to: - receive levy funds for you to spend on apprenticeships
- manage your apprentices
- pay your training provider
- stop or pause payments to your training provider
You can only use funds in your account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England, and only up to the funding band maximum for that apprenticeship.
If the costs of training and assessment go over the funding band maximum, you will need to pay the difference with other funds from your own budget.
You can’t use funds in your account to pay for other costs associated with your apprentices (such as wages, statutory licences to practise, travel and subsidiary costs, work placement programmes or the
setting up of an apprenticeship programme).
Non-levy paying employers will also get support with apprentice costs by sharing the cost of training and assessing their apprentices with government - this is called ‘co-investment’.
This isn’t available until May 2018 when you will pay 10% towards to the
cost of apprenticeship training and government will pay the rest (90%), up to the funding band maximum but it may be a useful way for small businesses to fund the training of their apprentices.
Noel Guilford