Apprenticeship Levy

In May 2017 the Apprenticeship Levy was introduced, which is a Government training levy to fund apprenticeships. It affects employers with a wage bill over £3million.

Employers are classified as non-levy or levy-paying, for those who are levy payers, they will be required to contribute 0.5% of their total wage bill. The levy is available to spend on apprenticeship training and not wages.

If you take on a 16-18 year old apprentice, regardless of the number of employees you have, you will receive a £1,000 incentive payment.

We understand that the changes may seem a little daunting; to help employers we have put together three employer guides:

Levy Guide

Non-Levy Guide

Higher Education & Construction Management Guide

Levy facts

Who will pay the levy?

If you have a wage bill over £3million you will be classed as a levy-payer and will contribute 0.5% of your wage bill, less an allowance of £15,000.

If you have a wage bill under £3million you will be classified as a non-levy payer and will be required to pay 10% towards the cost of training, the remaining 90% will be paid for by the government.

How much levy will you pay?

Employers with a wage bill over £3million will be charged a levy of 0.5%.

There is a levy allowance of £15,000 per year. This means the total an employer will pay is 0.5% of their wage bill less £15,000.

The wage bill includes all earnings that are subject to class 1 National Insurance contributions, so things like wages, bonuses, commission and pension contributions.

If I recruit a 16-18 year old is the training free?

Yes, but only if you employ less than 50 staff. If you employ more, you will be expected to contribute 10% to the cost of the training.

If you are a levy-payer and take on a 16-18 year old you will pay the funding band from your levy pot however you do still qualify for the £1,000 incentive.

What can the levy can be spent on?

You can spend your levy funds on apprentice training for either existing staff or new recruits.

The individual has to meet the apprentice eligibility criteria and training must meet an approved standard or framework

For existing staff the apprenticeship has to be relevant to their role and is a suitable progression. For example after completing the apprenticeship the member of staff will be given more responsibility or promoted.

How will the levy be collected?

It will be collected through the PAYE system alongside tax and national insurance.

Are there any penalties for non-payment?

Yes - the time limits, penalties and appeal procedures will be the same as those for income tax.

What happens to the money once it’s paid?

Funds will be deposited into the new Digital Apprenticeship Service (DAS).

The DAS system is a new online portal available to employers to help them manage their apprenticeship levy and pay for training.

Employers will be able to set up an account and view the balance of their levy and see any previous transactions.

They will also be able to access digital vouchers to pay training providers.

How long will digital vouchers last?

Use it – don’t lose it!

Digital Funds will expire 24 months after they enter your account. Vouchers are spent when they leave your account as a payment to a training provider.

What happens if the levy balance doesn’t cover the cost of the training?

Where the monthly cost of apprenticeship training cannot be fully met by funds from your digital account, you must co-invest 10% of the outstanding balance for that month. The government will pay the remaining 90% up to the funding band maximum.

What are trailblazer apprenticeships?

A trailblazer is made up of a group of employers who work together to design new apprenticeship standards for occupations within their sectors. A number of new standards have already been created.

What is happening with existing apprenticeship frameworks?

Existing frameworks will be available until new replacement standards have been approved for delivery. The levy can only be claimed for standards that are on the apprenticeship standards list.