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Every business in the UK will be able to benefit from support or funding thanks to an apprenticeship levy that is set to create 3 million qualified apprentices by 2020.

The fund, expected to generate £3 billion per year, will provide funding and support for apprenticeships, helping all businesses upskill existing employees and attract the very best new talent.

Your business will fall into one of two categories – a levy payer or non-levy payer. Either way, the levy is available to help you make the most of apprenticeships so you can grow and develop your business.

Are you a levy payer?

If your company has a wage bill greater than £3 million, the government will class you as a ‘levy payer’. This means you are required to pay a levy of 0.5% on any portion of your wage bill above £3 million.

The levy is collected by HMRC on a monthly basis through PAYE. Payments are placed in your own digital account and topped up by the government with an additional 10%. This means for every £10 you pay, you receive an extra £1. The money in your digital account can then be used to pay 100% of the course fees for your apprenticeships.

If your business fits into this category, the levy is designed to help you invest in apprentices and benefit your business.

What if you’re a non levy payer?

If you’re one of the 98% of businesses classified as a ‘non levy payer’, you will have a wage bill of less than £3 million and therefore nothing to pay. However, you can still access funding for apprentices.

The government will pay a minimum of 90% towards any course fees for your apprentices. This means you pay the first 10%, but your education provider will receive the other 90% directly from the government. Your provider also takes care of the apprentice admin, making the process as simple as possible for you.

Additional funding available

Whether you pay the levy or not, you may also be eligible for additional funding. The extra funds are designed to support the employment and training of apprentices whose circumstances may limit their opportunities.

Any business with an apprentice who is under 19, a care leaver aged between 19 and 24, or has a local authority Education, Health and Care (EHC) plan, will receive £1,000.

If your apprentice meets the above criteria – and your business has fewer than 50 employees – you will also receive 100% funding towards the course fees for that apprentice.

The finer details

There are further considerations for businesses who pay the levy. For example, if you don’t spend the money from your digital account on apprenticeships, it will expire after 24 months.

It may be your levy payments aren’t enough to cover the cost of your apprentices. In this instance, you can access the same 90% funding as other businesses. This means you’ll have to pay the first 10%, but your education provider will take responsibility for drawing down the remaining 90%.

There is also limit on the amount levy payers – and non-levy payers - can allocate to each apprentice. This depends on the subject studied, as each has been given a funding band with different upper limits.

There are other opportunities to spend the levy money, such as End Point Assessments. The cost of an assessment may be separate to the course costs, but as they are still considered integral, it is possible to receive funding if the overall amount is below the cap.

From 2018, the government is expected to allow levy payers to transfer 10% of their annual levy to businesses in their supply chain, so they can benefit from 100% funding for course fees.

Takeaways

• The apprenticeship levy provides sustainable funding for apprenticeships
• Every businesses with a wage bill above £3 million will be a levy payer, paying 0.5% on any wages above that amount
• Levy payers can use 100% of the resulting funds to pay apprenticeship course fees
• Businesses with a wage bill below £3 million have no levy to pay
• Non levy payers receive 90% funding towards apprenticeship course fees
• If an apprentice is under 19, a care leaver aged 19-24, or has an EHC plan, businesses receive an additional £1,000
• Apprenticeships fill industry skills shortages by combining on-the-job training with a university education
• The government is targeting 3 million qualified apprentices by 2020

Find out more

If you want to know more about how you can make the most of the apprenticeship levy and the benefits of apprenticeships, we’re here to help.

Call 0114 225 3433
Email apprenticeships@shu.ac.uk