The Apprenticeship Levy came into force on 6th April 2017 but not all Employers have had the time to understand the changes. Our brief update, put together with the help of South Cheshire College, gives Employers of all sizes a guide to the Apprenticeship Levy.
Our Apprenticeship Levy download our Apprenticeship Levy White Paper provides more detailed guidance for Employers. In addition, If you are considering taking on an apprentice you should read our payroll and apprentices guide.
What is an Apprenticeship?
An apprenticeship combines practical training in a job with study. Apprenticeships are a useful tool against skills shortages. The Skills Funding Agency reported Apprentice Employers are 5 times more likely to rapidly expand their business. This, along with the introduction of the Apprenticeship Levy, therefore means it’s an important time for Employers to assess their options.
We’ve found Employers have had most success when they have made a strong relationship with apprenticeship providers. Stephanie Wright from South Cheshire College commented:
“We are currently working with employers of all sizes to help them understand the apprenticeship reform and the impact it will have on them. We have been working alongside large employers to plan their apprenticeships to maximise their levy payments and with the non-levy payers to see how apprenticeships can best support their workforce.”
As a result, Employers who take the time to develop relationships with Apprenticeship Providers will get better results.
The new legislation means employers will a pay bill over £3 million will have to contribute to the levy the equivalent of 0.5% pf their pay bill. Each Employer will be given an Apprenticeship Levy allowance of £15,000. Therefore, each Employer will only pay contributions on pay bill exceeding the £3 million.
The funds raised can then be used by the Employer to fund Apprenticeships. It is hoped that the legislation will help the government meet its commitment to 3 million Apprentices by 2020.
Employers Paying the Levy
Employers can access your Digital Apprenticeship Service Account which will allow you to access funds and pay for Apprenticeships. Therefore, if you have not done so already, you should create an online account as soon as possible.
Levy payments will be topped up by the government by an additional 10%. The funds can then be used to pay for apprenticeships in a range of subjects. Guidance on subjects and costings can be found by visiting the Funding Apprenticeship Systems website.
You should note that after 24 months of entering the Digital Apprenticeship Services Account your Levy Funds will expire. This is a process that takes place automatically and includes the top up amounts from the Government. You will be given reminders of any fund nearer expiration within the Digital Services Account Service.
Employers who Don’t Pay the Levy
Employers with a pay bill under £3 million do not have to pay into the Levy but will get some support from the government. Under the co-investment model Employers will be required to pay at least 10% of the apprenticeship cost with the government contributing the rest (90%) up to the funding maximum.
Employers who don’t contribute to the levy will not currently have access to the apprenticeship service. As a result they will need to pay the training provider directly.
Employers with under 50 employees
Additional funding is available to employers with under 50 employees. As a result, smaller Employers have access to fully funded apprenticeships for 16-18 year olds.
More information about South Cheshire College and the support they provide Employers can be found on their website.
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