UNDERSTANDING THE APPRENTICESHIP LEVY
Paying the Apprenticeship Levy
Spending the Apprenticeship Levy
Payments are spread across the entire lifetime of the Apprenticeship – taken each month by your training provider. This means that you don’t have to meet the full cost of the Apprenticeship at the start of the training.
You just need enough funds in your account to meet the monthly payments. In addition, 20% of the cost of the Apprenticeship will be held back and taken from your Digital Apprenticeship Service (DAS) online account at the end of the Apprenticeship.
Romain Designs Training can help you to manage this process – making clear the full cost of your Apprenticeship, the amount of funds that are available and how much you have to spend every month.
Because the cost is spread over the length of the programme, Apprenticeships are much more affordable than you might think. So, contact us today firstname.lastname@example.org to make sure you don’t miss out.
Yes. Levy funds will expire 24 months after they enter your digital account unless you spend them on apprenticeship training. For example, funds that entered your account in July 2017 will expire in July 2019.
If you don’t use them, you will lose them.
Levy funds can pay for Apprenticeship training and assessment. This must be with an approved training provider (such as Skills Training UK) and a registered end-point assessment organisation.
They cannot pay for Apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships or the costs of setting up an Apprenticeship programme.
Each Apprenticeship has been placed into one of 15 funding bands ranging from £1,500 to £27,000. These bands determine the maximum amount that can be spent on each Apprenticeship.
The upper limit of the funding band also caps the maximum price that the government will ‘co-invest’ if an employer does not pay the Apprenticeship Levy or has insufficient funds to pay for the number of Apprenticeships they want to use.
If an employer pays the Apprenticeship Levy but their funds don’t cover the full cost of the Apprenticeship training they would like to buy, then additional support is available.
The government will pay 95% of the additional costs (up to the maximum of the relevant funding band) – with you as the employer ‘co-investing’ 5%.
Employer with a levy pot of £35,000 takes on five apprentices
Agreed cost = £9,000 each
Total Apprenticeship spend = £45,000
Shortfall = £10,000
Government pays 95% = £9,600
Employer pays 10% = £500
Total spend by employer = £35,500 (£35,000 + £500)
Total contribution from government = £9,500
Employers are given an extra £1,000 for taking on an Apprentice aged 16-18. The money is paid in two stages – at three and 12 months.
An extra £1,000 is also available for Apprentices aged 19-24 with additional learning needs or who come from a disadvantaged background.
SMEs and non-levy paying employers
Employers with an annual wage bill of less than £3m do not pay the Apprenticeship Levy.
Instead, you pay just 5% toward the cost of the Apprenticeship and the government will pay the remaining 95%. This is known as ‘co-investment’. The maximum cost will depend upon which one of the 15 funding bands the Apprenticeship you want to use falls into.
Yes. If you are an SME with less than 50 employees, then the government meets the full cost for Apprentices aged 18 and under. For those aged over 19, they will pay for 95% of the cost – the rest has to be met by you.
The government also meets all of the costs for employing Apprentices aged 19-24 from a disadvantaged background or with additional learning needs.
SMEs are still subject to the same Apprenticeship funding bands as levy-paying employers. From 2019 you will have to pay for the cost of training through the new Digital Apprenticeship Service (DAS) online account.
If you haven’t done so already, you can register online with the Education and Skills Funding Agency (ESFA) at www.gov.uk/guidance/manage-apprenticeship-funds