Apprenticeship Levy

All employers with an annual wage bill of over £3million pay the apprenticeship levy. The levy is used by the government to fund the development and delivery of apprenticeships.

Employers fall into one of two categories; levy-payer and non-levy payer.

Non-Levy Payer

Non-levy paying employers will share the cost of training and assessing their apprentices with the government - this is called ‘co-investment’. Prior to March 2019 the non-levy contribution was 10%. For apprenticeship starts after 1^st April 2019, the contribution required by employers is 5%, the government will pay the remaining 95%, up to the funding band maximum.

If you employ a 16-18 year old and have less than 50 employees your contribution will be £0 – so the training will be free.

Levy-Payer

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.

The wage bill includes all earnings that are subject to class 1 National Insurance contributions, such as wages, bonuses, commission and pension contributions. There is a levy allowance of £15,000 per year. This means the total you will pay is 0.5% of your wage bill less £15,000.

If you do not have enough funds in your levy pot to contribute towards the cost of training, the balance will be co-funded by the government, and you will contribute 5% of the balance.

Approved Training Provider

Leeds College of Building are classified as an approved training provider for the delivery of apprenticeships. Apprenticeship frameworks and standards are allocated a funding band, all of the College’s apprenticeships are currently within the upper funding band limit.

The government apprenticeship website provides a step by step guide on choosing a framework or standard and selecting a training provider and assessor.

Useful link: How to take on an apprentice

Higher & Degree Apprenticeships

If you are considering a higher or degree apprenticeship for your employees, we recommend reading the Employer’s Guide to Professional & Technician Apprenticeships

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.