All UK employers with a total employee pay bill above £3m a year will pay the levy. This includes public and private sector organisations, education providers and charities.
Your pay bill is your total employee earnings subject to Class 1 secondary National Insurance contributions. The levy will be deducted monthly in real time reflecting changes to your pay bill.
Employees benefit from a single fixed £15,000 annual allowance to offset against the levy. Only one allowance may be claimed by any single organisation, even if multiple payrolls are in operation.
In addition, all employers will benefit from a 10% ‘top-up’ payment. The aim is that employers who commit to Apprenticeships will be able to get out more than they pay in to the Levy, using the top up payment.
Employers who pay the Apprenticeship Levy and provide Apprenticeships will be able to access their Levy contributions as electronic vouchers to pay for training their apprentices using the new Apprenticeships Service.
Some examples of levy payments
|Employer||No.of employees (earning £20,000 on average)||Wage bill||Levy sum (x 0.5%)||Levy due (after £15,000 allowance)|
How can I use the levy?
Employers must spend their electronic vouchers within two years. If you don’t use your voucher within two years, the funds will be made available for other employers.
The levy can only be spent on Apprenticeships delivered by an approved and registered training provider. It cannot be spent on any either types of training or CPD, on salaries for apprentices, or on the cost of setting up an Apprenticeship.
The voucher is redeemed against the delivery of an Apprenticeship and completion of end-point assessment. Proof of the Apprenticeship will need to be submitted by the training provider to the Skills Funding Agency. The evidence pack will include the learner agreement, the payment schedule, and schemes of work.
You could become a training provider in your own right as some other companies have done. You would be subject to Ofsted inspections and would need to be compliant with all processes outlined by the Department for Business, Energy and Industrial Strategy.
Will the government continue to fund Apprenticeships?
The government has made a commitment to provide 90% of the cost of training an apprentice to businesses that are too small to pay the levy. However, if you spend all your levy allocation and want to train further apprentices, this will also be supported by government funds.
Northampton College can help...
We currently provide a wide range of Apprenticeships across a number of key sectors. We worked with over 800 businesses and delivered around 1,100 Apprenticeships during the last year. We can help you with a number of aspects of the Apprenticeship Levy including:
Help and advice
You could start with a free, no obligation review of your training requirements carried out by one of our Business Centre advisors. They will conduct a Training Needs Analysis and advise you on the best Apprenticeship frameworks and standards for your team.
Apprenticeship Levy management
We can put together a robust plan to help you manage your payments and how they are spent including how much you can recover for each Apprenticeship. That way you will keep on top of how much of the levy you are investing in your own workforce.
We can help if you have roles that you need to fill by advertising your vacancies free of charge and helping match candidates to your specific requirements.
For further information, see the following documents:
Apprenticeship reforms - progress so far