The What, How and When of the Apprentice Levy

Apprenticeship Training
What is the Apprenticeship Levy?

The Apprenticeship Levy is a new tax some employers in the UK have become required to pay from spring 2017. It is a government initiative to proactively increase the quantity and improve the quality of apprenticeships across the country. The government, together with the private sector, aims to train 3 million new apprentices by 2020. The tax applies to employers with an annual pay bill of more than £3 million, who will need to pay 0.5% of their pay bill towards the levy. The pay bill refers to payments to employees that are subject to employer Class 1 secondary NICs.

Levy payments started to be deducted in May 2017 and it will be up to employers to notify HMRC each month as to whether they are eligible to pay into it.

The levy funds will need to be spent on approved apprenticeship training offered by eligible training providers. Eligibility requires training organisations to be listed on the Register of Approved Training Providers (RoATP).

The government will help employers meet their commitment by providing an allowance and additional funding. Each employer will receive a £15,000 allowance to offset the levy payment. This equates to 0.5% of £3 million and means that the employers’ spend is on the portion of their pay bill that is over £3 million.

In addition, employers in the English apprenticeship system will receive a further 10% top-up added to the funds in their apprenticeship service account. So, for every £10 that is paid into the account to spend on apprenticeship training in England, the employer’s account is credited with an additional £1.

How do I Access It?

Levy-paying employers in England will access funding through their digital apprenticeship service account. See this video for information on how to create an account. The platform allows employers to select apprenticeship training from the list of approved training providers as well as to post apprenticeship vacancies.

When Does It Have To Be Spent By?

Employers have a rolling 24-month window within which to spend their funds (‘vouchers’) before they expire. The service uses funds that have entered the account first whenever payments are made.

The digital apprenticeship service will only apply to employers in England. Separate measures will be in place for Scotland, Wales and Northern Ireland.

Funds that aren’t spent 24 months after they enter your account will expire. That means that if you received your funds in September 2017, you have until September 2019 to spend them.

As of July 2018, big businesses can now transfer up to 10% of their levy to as many other employers as they choose. This flexibility was designed to encourage apprenticeship starts in small business as well as for companies that pay the Apprenticeship Levy.

For more information on Education and Skills Funding Agency Apprenticeship updates click here.

David Dawson has over 15 years working in the HR and Recruitment Sectorand over 5 years of designing, creating and implementing Learning & Development strategies for clients.