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    Funding & the Levy

    Find out what the Levy is and how it has changed apprenticeships.

    The government has ambitious plans to grow the apprenticeship programme, with a target of 3 million new starts by 2020.  They have introduced new apprenticeship standards, designed by employers, covering a wider range of job roles and at increasingly higher levels – making apprenticeships accessible to a wider audience than ever before.

    They also introduced the apprenticeship levy back in 2017, which will help to fund these major changes, and enable larger employers to invest in apprenticeships. Most businesses in the UK will not pay the apprenticeship levy but can still access government funding for apprenticeships.

    Government Funding

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    While employers are required to pay the salary costs for apprentices, costs for training are supported through the levy or co-investment. Costs for training will be agreed at the outset of an apprenticeship programme and you can discuss this with a member of our Business Development Team.

    Co-investment (for non-levy payers)

    The government will ‘co-invest’ in the cost of the apprenticeship with employers that don’t pay the levy.  You will be asked to make a small contribution to the cost of the training. The government’s co-investment increased from 90% to 95% on 1st April 2019, making apprenticeships more affordable than ever!

    However, if you are a non-levy paying employer, the government will pay 100% of apprenticeship training costs for 16-21 year olds.

    The government will also pay you £1000 for each 16-18 year old you enrol on an apprenticeship (paid in 2 stages).  This is to recognise the additional costs/support that may be required when recruiting a young person. This is paid irrespective of the size of the company.

    If you are interested in recruiting an apprentice we can provide an advertising, pre-screening and recruitment service free of charge or, alternatively, you may wish to offer this programme to your existing staff.

    Apprenticeship Levy

    The levy requires all employers operating in the UK, with a wage bill over £3 million each year, to invest in apprenticeships, regardless of whether they employ apprentices or not.  No levy will be paid on the first £3 million of their payroll, above this level it will be paid at a rate of 0.5% of the payroll cost through PAYE (alongside income tax and NI).

    Payments will be directed into your own digital apprenticeship service account, which you can then use to pay for apprenticeship programmes (no other training programmes will be funded via this account – only apprenticeships).

    However much you pay into the digital account, the government will pay an additional top-up of 10% into that account for you to use on apprenticeships.

    Funds will expire 24 months after they enter your account unless you spend them on apprenticeship training.

    You will be able to use your levy funds (up to 50%) to pay for the training of apprentices with other employers, perhaps in your supply chain.

    Once the training you have agreed has started, monthly payments will be automatically taken from your digital account to pay the training provider.

    You will have access to your digital account to check what funds have been paid in and out.

    Where you want to arrange apprenticeship training that exceeds the funds in your account, the government will support 95% of the price agreed (up to a maximum funding band limit) and will pay this directly to the training provider (monthly).  You will need to pay the training provider for your 5% co-investment.

    If you would like further information on funding or the apprenticeship levy, please do not hesitate to contact a member of our Business Development Team on 0191 4904646.

    The Apprenticeship Levy FAQs

    We have gathered together, and hopefully answered, some of the most frequently asked questions and will keep this as up to date as possible.
    • What is the Apprenticeship Levy?
    • The Apprenticeship Levy is an amount of money that employers will pay towards the funding of Apprenticeships in England. In effect it is a new tax which the government has introduced.
    • Why was it introduced?
    • It was introduced to help the government meet their target of 3 million Apprentices by 2020. It’s also intended to encourage increased commitment to Apprenticeships by employers, since they can use it – to fund their own Apprenticeship training – or lose it.
    • When was it introduced?
    • The Levy was introduced on 6 April 2017. All Apprentices who started before 1 May 2017 will continue on the previous funding arrangements. A new system for funding all new Apprenticeships (including through the Levy) began in May 2017.
    • Who has to pay it?
    • It applies to all industries in the UK, including public and voluntary sector organisations such as charities. However, there is a £15,000 ‘allowance’ – or threshold for payment – which means that only organisations with a wage bill of over £3 million will actually pay any Levy. This means that only around 2% of businesses in the UK will pay the Levy.
    • I don’t have Apprentices, do I still have to pay?
    • As above, it applies to all organisations irrespective of whether they have Apprentices. Employers can’t opt out of paying the Levy.
    • How much do organisations have to pay?
    • The Levy has been set at a rate of 0.5% of the annual wage bill, based on total employee earnings subject to Class 1 secondary National Insurance Contributions (NICs). The following are examples of how the calculations will work: Employer 1: Annual Wage Bill = £2,000,000 Levy sum: 0.5% x £2,000,000 = £10,000 Since this is less than the £15,000 ‘allowance’ this employer won’t pay any Levy Employer 2: Annual Wage Bill = £4,000,000 Levy sum: 0.5% x £4,000,000 = £20,000 £20,000 minus £15,000 allowance = £5,000 Levy to pay for this employer Employer 3: Annual Wage Bill = £10,000,000 Levy sum: 0.5% x £10,000,000 = £50,000 £50,000 minus £15,000 allowance = £35,000 Levy to pay for this employer
    • How much will the Levy raise?
    • The government expect to raise £3 billion per year though the Levy with £2.5 billion being made available for Apprenticeships in England. It is expected that the remaining £0.5 billion will be raised / and passed to the devolved governments / assemblies in Scotland, Wales and Northern Ireland.
    • How is the Levy collected?
    • The Levy is paid monthly to HM Revenue and Customs (HMRC), through the Pay as You Earn (PAYE) process alongside tax and NICs.
    • How can I access the money I’ve paid into the Levy?
    • The money you pay will be held in a new Digital Apprenticeship Service (DAS) account. You will be able to use this to pay for training and assessment of Apprentices. If you haven’t done so already, you will need to register to create your account. Training Providers, like Access Training, can advise you on this.
    • What’s this about government ‘top-ups’?
    • The government will top-up your funds by 10%. That means that for every £1 that enters your digital account, you’ll get £1.10 to spend on Apprenticeship training.
    • What can I spend my Levy money on?
    • It can only be used towards the costs of Apprenticeship training and assessment. This must be with an approved training provider and assessment organisation. It can’t be used on other costs associated with your Apprentices (such as wages or travel costs) or for other types of training.
    • What sorts of Apprenticeship are there?
    • Apprenticeships come in different levels from level 2 up to degree level Apprenticeships and are based on job roles. There are 2 different types of Apprenticeship. Apprenticeship frameworks involve a series of work related vocational and professional qualifications. These are gradually being phased out and replaced by new Apprenticeship Standards which cover specific job roles. These set out the core skills, knowledge and behaviours required by the Apprentice to be fully competent. For ‘standards’, Apprentices will need to undertake an end point assessment to complete / achieve their Apprenticeship (rather than achieving specific stand-alone qualifications).
    • What age do Apprentices have to be?
    • Any age. You can offer Apprenticeships to new or current staff of all ages and at any level. The government wants to encourage employers to offer young people excellent career opportunities through Apprenticeships. They will therefore pay you £1,000 for each 16-18 year old you enroll on an Apprenticeship (paid in 2 stages, at 3 and 12 months). This is paid whether you are a Levy or Non-Levy payer and is irrespective of the size of company. Older staff (new or current), even those with degrees, can now also follow Apprenticeships if they are taking up new roles or require new knowledge and skills to perform their roles.
    • Who will provide the training and assessment?
    • You will need to select a training provider. If you are spending funds from your digital account, or accessing funding through co-investment, you can only spend it with an approved provider. You can get help to choose an Apprenticeship and training provider on-line through https://findapprenticeshiptraining.sfa.bis.gov.uk/ For Apprenticeship standards, you will also need to choose an end point assessment organisation. Training providers (such as Access Training) will be able to advise you on this.
    • How long do Apprenticeships last?
    • This depends on the Apprenticeship. All Apprenticeships should have a minimum duration of 12 months, but some may take considerably longer. For instance, we would expect a Customer Service level 2 Apprenticeship to take 15 months but a Management Higher Apprenticeship (level 5) to take 24 months. You may also want to develop your Apprentice through different levels. Accounting (AAT) Apprentices for instance, often move from level 2, to 3 and then level 4 (then often progress to CIMA/ACCA), so they could be supported through Apprenticeships for more than 4 years.
    • How much for Apprenticeships cost?
    • You will need to agree this with the training provider you choose to deliver your Apprenticeship/s. Funding support for Apprenticeships are based on maximum bands set for each Apprenticeship framework or standard (ranging from £1,500 to £27,000). Costs are usually spread out over the length of the Apprenticeship. For those employers who will be paying the Levy, a discussion up front with your training provider may be useful to ensure you maximise your funding. To give you an indication of possible costs, the following are examples of Apprenticeships and funding band maximums: Customer Service level 2: £3,500 Accounting level 3: £8,000 Management level 5: £7,000 Engineering Machinist level 3: £21,000
    • What happens if I don’t spend all my Levy money?
    • Funds paid in to your digital account will expire after 24 months unless you spend them on Apprenticeship training. You will be able to access your digital account to see Levy payments going in and payments for Apprenticeship training going out.
    • Can I use it to fund Apprenticeships for other employers?
    • The government are aware that some employers would like to use some of their money to fund Apprenticeships for other employers if they won’t use it all themselves, for example employers in their supply chain or an Apprenticeship Training Agency (ATA). They now allow employers to transfer 25% of their funds to another employer’s digital account from 2019.
    • What happens if I want to spend more than I have in my account?
    • If you want to spend more than your Levy on Apprenticeship training, the government will provide support to help meet the additional costs, called ‘co-investment’, similar to the arrangements for employers who don’t pay the Levy – see below.
    • I’m not paying the Levy, so how do I access funding for apprenticeships?
    • The government ‘co-invest’ in Apprenticeship training with employers that don’t pay the Levy, i.e. you will be asked to make a small contribution to the cost of the training and they will pay the rest, up to a maximum amount of funding available for that Apprenticeship. The government will contribute 95%, with employers paying the remaining 5% direct to their chosen training provider. You can get help to choose an Apprenticeship and training provider on-line through https://findapprenticeshiptraining.sfa.bis.gov.uk/.
    • Any extra help for small employers?
    • The government support employers with less than 50 employees by paying 100% of Apprenticeship training costs for 16-18 year old olds and 19-24 year olds who have been in care or have a Local Authority Education, Health and Care Plan.
    • Will there be funding for employing Apprentices who need extra support?
    • The government will pay you £1,000 for each 16-18 year old you enroll on an Apprenticeship (paid in 2 stages, at 3 and 12 months). This is to recognise the additional costs / support that may be required when recruiting a young person. This is payable to Levy and Non-Levy payers and is irrespective of the size of company. They will also pay the full costs for any level 1 and 2 English or Maths training required by your Apprentices (any age).
    • What will happen to existing industry Levies?
    • Some industries – such as Construction and Engineering – already operate Levy schemes. Employers paying those will still have to pay the Apprenticeship Levy. Industry Training Boards are consulting with their members and considering potential changes that might be needed to their current Levy arrangements.
    • Where can i get further information or advice?
    • We would be happy to answer any queries you have (if we possibly can), so contact us on 0191 – 490 4646 or email info@accesstraining.org. The government have also set up an employer helpline which you might find useful: Email: nationalhelpdesk@apprenticeships.gov.uk Phone: 08000 150 600 Step-by-step guide to the Apprenticeship Service for levy payers