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    The Apprenticeship Levy

    The UK Government is introducing the Apprenticeship Levy in April 2017 to fund a step change in apprenticeship numbers and quality – delivering on the commitment that there will be 3 million apprenticeships underway by 2020.

    The Levy will put apprenticeship funding on a sustainable footing and improve the technical and professional skills of the workforce.

    • Coming into effect in April 2017
    • Payable by all employers across all sectors in the UK
    • The Levy is 0.5% of gross staff pay bill for all employers
    • Annual allowance of £15,000 against the levy
    • Can only be used to fund staff training
    • Digital accounts will be topped by 10%
    • Unused Levy will expire after 2 years
    • Apprentices under 25 will be exempt from Class 2 NI contributions (from April 2016)

    The Levy is 0.5% of employers total company payroll collected monthly via PAYE. All employers will have an allowance of £15,000, which means that the Levy is applicable on staff payroll over the first £3,000,000.

    Click on the questions below for further information.

    • Further information

      • How much will my company/organisation pay?

        The Levy is 0.5% of employers' total company payroll collected monthly via PAYE. All employers will have an allowance of £15,000, which means that the Levy is applicable on staff payroll over the first £3,000,000.

      • What happens to the money once it is paid under the Levy?

        The money will be collected by HMRC. From May 2017, individual employers’ funding will be made available to them via a new digital account, through which employers will be able to pay for training for apprentices. In England, employers will be able to direct funding towards the apprenticeship training they want through a new Digital Apprenticeship Service (DAS). The Service will also support employers to identify and pay a provider, choose an apprenticeship training course, find a candidate and choose a training provider.

        Employers will be able to pull funding down through the DAS from 1 May 2017. Employers can use funds in their digital account to pay for training from the first month they declare levy payable through the PAYE system. All apprenticeships started before 1 May 2017 will be funded through to completion according to the existing rules.

        Employers will be free to spend their money on apprenticeship training which they judge best meets their needs.

      • What if your payroll is less than £3million?

        Employers with a pay bill of less than £3million will not have to pay the Levy.

        This group will include around 98% of all employers. These employers will continue to have access to government funding to support apprenticeships.

        Further details on the support available is expected later in 2016. All employers will have access to the Digital Apprenticeship Service whether they have paid the Levy or not and will be able to use it to manage the Government funding available to them to pay for apprenticeship training.

      • Will Levy paying employers have to put in their own money as well as the Levy to pay for training?

        There are two circumstances where employers are likely to have to contribute additional funds:

        • where the cost of the training they wish to buy is greater than the funding cap for a particular standard or framework
        • where an employer has spent all of their Levy contribution and all of their top-up and wishes to spend more on additional apprenticeship training. This is called Co-investment.

        Co-investment rate: For employers who do not pay the levy, and those who pay the levy but do not have sufficient funds in their digital account to cover the training and assessment costs in a particular month, the government propose that the employer co-invests 10% of the costs, with government paying the remaining 90%.

        Small employers: The government propose to pay 100% of the apprenticeship training costs for small employers (those with fewer than 50 employees) where the apprentice is a 19-24 year old care-leaver or is 19-24 years of age and has a Local Authority Education, Health and Care plan.

        Extra support for apprentices aged 16-18 years of age, 19-24 year old care-leavers and those who have an Education, Health and Care plan: The government recognise there are additional costs associated with supporting younger apprentices, young care-leavers and young adults with additional learning needs. The government therefore propose to make an additional payment of £1,000 to employers and a further £1,000 to training providers to help with these extra costs and ensure all individuals have the opportunity to benefit from an apprenticeship.

        Learning support: The government propose to pay training providers up to £150 per month plus additional funds based on evidenced need to support the provision of extra learning support for apprentices with conditions such as dyslexia, learning difficulties or disabilities.

      • What happens to those companies with their own training schemes?

        Apprenticeships are available at all levels and offer valuable transferable skills which are beneficial to both the apprentice and the employer. If you already offer in-house training we can work together to look at the best options to maximise your ROI and the impact of the Levy, together with how you could accredit or validate your existing programme.

      • What if an apprenticeship doesn’t exist in my sector?

        If an apprenticeship isn't currently available for your sector we can work together with you and a group of employers to take advantage of the exciting opportunity to develop one.

        Transfer of digital funds: From 2018 the government intend to allow levy-paying employers to transfer up to 10% of the annual funds entering their digital accounts to other employers on the digital system. For example, to help with training and supporting their supply chains.

    Find out more

    To learn more about the Apprenticeships Levy please visit the Government's Apprenticeship Levy website. If you can't find an answer to your question please contact our Corporate Engagement team:

    Phone: 020 8411 5050
    Twitter: @CorporateMU

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