Who Pays and How Much?

The UK Government is aiming to create three million apprenticeships by 2020 and introduce new apprenticeship standards. From 6 April, all employers with a wage bill of more than £3 million are required to pay an annual 'Apprenticeship Levy' of 0.5 percent to fund the initiative.

The levy is paid by employers into a central pot, and each employer can then access its own account via an online portal known as the 'Apprenticeship Service'. Once an employer sets up its online account this will allow it to use the credits it gains from paying the Levy to choose and fund apprenticeship training.

  EXAMPLE

The amount you have available to spend is calculated on a monthly basis as follows:

  • Your Levy is 0.5 percent of your gross annual payroll (e.g., £4m), less a £15,000 allowance.
  • You will receive £5,496 of levy credit per year.
  • The balance is then divided by 12 and rounded down to the nearest pound. This gives a monthly levy payment of £416 (rounded down). Ø Assuming 100 percent of your pay bill goes to employees in England, £416 is multiplied by 100 percent. The government tops that up by 10 percent, which gives you £458 (rounded up) to spend each month.

How To Use the Cash

Levy funds can be used (1) to employ apprentices, or (2) to upskill existing employees up to a funding-band maximum for each apprenticeship. The funding maximum will vary on the level and length of the apprenticeship you choose and is set by the Government. The Government has listed the range of approved apprenticeship schemes online, which are provided by specialist training providers.

If you haven't already done so, you can now create an account for the Apprenticeship Service to receive Levy funds, manage your apprentices and pay your training provider.

Maximise Your Returns

Increasing the number of apprenticeships also may increase the range of skills within your workforce, enabling you to create a new talent pool that addresses any skills shortage. There is no obligation to have a strict 'job description', so apprentices can be used flexibly throughout the business.