The Apprenticeship Levy

The apprenticeship levy has been in place since 2017 and is how many employers are choosing to fund their development programmes. They aren’t just aiming the opportunity solely at new employees but also at those existing employees who have significant training and development requirements.

Apprenticeship levy funding can provide businesses with an opportunity to introduce high quality skills, knowledge and behaviour training across a wide range of roles and subject areas. In particular, developing the next generation of team leaders, first line supervisors and managers through the apprenticeship route is one area that is working well across many different industry sectors.

We have put together key information about how the apprenticeship levy works and we invite you to get in touch with us for further clarity or if you feel you would like to speak to us about how you could be using your funds more effectively.

One thing is clear, this is a fund that you should try to use, rather than lose. After 24 months, unused funds expire and are returned to the treasury.

How the apprenticeship levy works

The government  introduced the apprenticeship levy on 6th April 2017. The apprenticeship levy requires all employers with an annual pay bill in excess of £3m to invest in apprenticeships. The levy amount is calculated at 0.5% of the employer pay bill however each employer will receive a £15,000 offset allowance each year therefore only employers with a pay bill in excess of £3m will pay into the levy.

Levy Funding Route:

Money that is paid into the apprenticeship levy will transfer to a digital account that  is provided through the Apprenticeship Service.  Employers will need to register to create an account and link it to PAYE schemes. The Government will top up these funds by 10%, therefore for every £1 invested employers will have £1.10 for apprenticeship training and assessment.  You can purchase apprenticeship training and assessment through an approved provider (such as TSP Learn).

Funds can only be used for apprenticeship training and assessment and cannot pay for wages, travel or subsidiary costs, management costs, work placements, traineeships or the costs of setting up an apprenticeship programme. Employers will have 24 months to spend their funds (vouchers) before they expire. Your digital account will let you know when funds are due to expire.

Co-Investment Funding Route:

Employers who have used up their levy funds and wish to train further apprentices will receive a 95% contribution from the government with the employer paying the remaining 5%.

Employers who are not paying into the levy will co-invest in apprenticeships. The government will contribute 95% of the training with the employer contributing the remaining 5%.

Further Funding Information:

The government will fund the apprenticeship training of 16 – 18 year olds for employers with less than 50 employees.

Additional funding incentives will also be provided to all employers who take on 16 – 18 year old apprentices.

The levy and co-investment funding routes can be used to train both existing employees or new employees of virtually any age as long as they are at least 16 years old.

TSP Learn can support you in the training of existing employees and the recruitment of apprentices through the .Gov website:  “Recruit an Apprentice”

We hope that this information has been helpful for you. If you have any questions or concerns, please do get in touch with us.