What is the apprenticeships levy?
The Apprenticeship Levy was introduced in April 2017 and is the biggest change to impact on the apprenticeship landscape. In short, all UK employers with an annual PAYE bill of over £3 million now pay an annual levy of 0.5%; this is taken on a monthly basis by HMRC and transferred into an employer’s account with the Digital Apprenticeship Service, topped up by the Government.
The levy ‘pot’ can only be used to fund the training and assessment of apprenticeships in England, with each apprenticeship standard sitting under one of 15 funding bands or caps, ranging from £1,500 to £27,000. Digital accounts are accessed online and used by employers to ‘purchase’ training programmes from a list of recognised providers, recorded in the Register of Apprenticeship Training Providers. Levy payments expire after 24 months unless they are spent on approved apprenticeship schemes. In the event that there are insufficient funds in an organisation’s digital account to cover the full cost of apprenticeship training and assessment, the government helps meet 90% of the additional costs.
How is the levy calculated in practice?
Let’s assume that you have an annual pay bill of £8,000,000.
- Your levy sum will be 0.5% x £8,000,000 i.e. £40,000.
- All employers receive an allowance of £15,000 from the Government to ‘offset’ against payment of the levy.
- Your annual levy payment will, therefore, be £40,000 less £15,000 i.e. £25,000.
- The Government then provides a 10% ‘top up’ to an organisation’s monthly levy contributions, so for every £1 paid in, a business has £1.10 to spend.
What happens if your annual wage bill is less than £3m?
In this case, you will not be required to pay the levy. Your organisation can, however, still receive government funding for apprenticeships up to 90% of the total costs.
Are apprenticeships only for new staff?
Levy payments can be used to both attract new talent to the organisation and support existing staff to develop and build new skills. Essentially, employees can be apprentices at any age and at any stage in their career, from school leavers to senior executives. For example, in the period August 2016 to April 2017, 47 per cent of all apprenticeship starts were aged 25 and over, with 13 per cent of those individuals aged over 45 according to the government's data library.
How are apprenticeships assessed?
All apprentices must undertake an independent end-point assessment. This is a synoptic assessment of the knowledge, skills and behaviours that have been learnt through the apprenticeship, and normally takes place during the last few months of the programme.
How long does an apprenticeship take?
This depends on the individual standard but the minimum duration is 12 months.