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Apprenticeships

Apprenticeship Levy

The apprenticeship levy is a form of taxation designed to help companies offer more apprenticeships. The Apprenticeship Levy was initiated by the UK government in April 2017, for all employers paying a wage bill of more than £3 million per year.

How can CCCT help?

CCCT can help you understand the apprenticeship levy and maximise funding incentives available. We offer a one-stop service to navigate the funding arrangements. We make sure that your workforce benefits from the high-quality training supported by the levy.

How does the levy work?

If you’re an employer with a pay bill over £3 million a year, you must pay the apprenticeship levy from 6 April 2017. Employers with a pay bill of less than £3 million a year will not need to pay the levy.

The levy is paid and collected through HMRC by larger businesses who can claim back their levy contribution to pay for training apprentices. The amount of levy funding employers have to spend is available on the Government’s online Apprenticeship Service and the employers’ Digital Service Account.

Less than 2% of UK employers pay the levy. Levy funds will create opportunities for young people across the country, delivering the skills British businesses need. The levy will give employers control of their training, agree a total price for each apprenticeship, which includes the costs of training and assessment. In England*, the government will top up employers’ levy with an extra 10%, paid directly to employers’ apprenticeship accounts.

What Training Does the Levy Support?

UK employers with an annual wage bill of over £3 million are required to invest in apprenticeships. The levy funds can be used for approved apprenticeship programmes that meet employer-approved apprenticeship standards.

The training can be used for existing staff or new recruits who meet the eligibility requirements.

How Much do Employers Contribute?

The levy rate is 0.5% of the total wages bill for employers (in all sectors and industries) who have a total employee pay bill of more than £3 million a year.

Use the Apprenticeship Levy calculator to estimate your contributions.

How do I use my Levy Contribution?

If you contribute to the levy, you will be able to see the funds you have available for apprenticeships online. To do this you will need to register for or use your current Government Gateway account. Log in to your account and add the details for the PAYE scheme you will use for your apprenticeship. You will then be able to manage your apprenticeship by adding apprentices’ names and quickly and easily authorise training provider payments.

How are Training and Assessment Costs Calculated?

Every apprenticeship standard and framework is placed in a funding band, which sets the maximum amount of funding that can be used towards training costs over the length of the apprenticeship. The same funding bands will apply to all employers paying for apprenticeships.

Will Employers Receive Other Funding Support?

The government is encouraging employers to support young people in quality apprenticeships by providing additional funding incentives:

  • To offset the levy contribution, the government provides an allowance of £15,000 to levy-paying organisations
  • If you employ a 16 to 18 year-old apprentice, you will receive £1,000 to help meet training costs
  • The £1,000 payment also applies if you employ a 19 to 24-year-old apprentice who was formerly in care or has an Education and Health Care plan
  •  If you employ someone 19 years or older, the government will contribute 90% of the training cost
  • Those employers who contribute to the levy benefit from a 10% top-up to their Digital Service Account
  • If employers use up all of their levy funding pot, they only need co-invest 10% for additional apprenticeships training, the government will fund the balance of training cost
  • Employers with a wage bill of less than £3 million do not contribute to the levy but are required to co-invest 10% of training costs with the government funding the balance

What about non-levy-paying employers?

Employers with a pay bill of less than £3 million a year will not need to pay the levy.

Non-levy paying employers will share the cost of training and assessing their apprentices with government – this is called ‘co-investment’.

The co-investment rate has changed for new apprenticeships starting on or after 1 April 2019. You will now pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.

All apprenticeships that started before 1 April 2019 will continue at the previous co-investment rate of 10%.

Where can I find out more?

To find out more about how much you will be able to spend on each apprenticeship and how the apprenticeship levy can help your business, read the following information:

Let us guide you through the apprenticeship levy. We’re here to answer all your questions about the apprenticeship levy and start your apprenticeship recruitment. Call us on 0207 391 6400 or email employer@capitalcct.ac.uk

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