Apprenticeship Levy
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The levy can be incredibly beneficial to businesses, providing a source of funding to support essential training and development, while also increasing workforce engagement through apprenticeship programmes.
What is the Apprenticeship Levy?
The Apprenticeship Levy was brought in by the Government in April 2017 as a way of creating more funds to support quality apprenticeship training and encourage employers to invest in apprenticeship programmes as a way of upskilling staff.
You begin paying the levy if you have a payroll above £3million and this will be taken at 0.5% of that payroll and then stored in a digital account which can be accessed to pay for the costs of apprentice training. This is called your apprenticeship levy allowance.
City Skills provides apprenticeship training across England and has the expertise to help you make the most out of your apprenticeship levy. Whether you’re a levy-paying employer or a small business exploring your options, our experts can work with you to understand apprenticeship funding and maximise your return on investment.
Your allowance:
- It applies to businesses with a payroll of more than £3 million
- The levy is charged at 0.5% of an employer’s total payroll
- It is collected monthly through PAYE.
- It is stored in an account for up to 24 months
- It is used to fund apprenticeship training
Apprenticeship Levy Explained
The Apprenticeship Levy was introduced as a government scheme to fund apprenticeships. The Levy applies to employers with a payroll of more than £3 million, who must pay 0.5% of their total payroll to HMRC monthly through PAYE alongside income tax and national insurance contributions. This cost is then offset by an annual £15,000 government allowance.
Your levy payment is then paid into an online Digital Apprenticeship Service (DAS) account (similar to online banking), which receives a 10% ‘top up’ from the Government. So as a levy-paying business, for every £10 you pay you can access an additional £1 to spend on apprenticeships.
Each apprenticeship standard has a cost band and these funds can be used to cover these costs. The funds can only be spent on apprenticeship training or End-point Assessment according to the funding rules.
After 24 months any unused levy funds expire and return to the government. This is to incentivise regular expenditure on high-quality apprenticeship training. When paying for apprenticeship training, the government will always use the oldest funds in your account first to minimise the window for fund expiry.
If you are a levy-paying employer, your DAS account can be used to:
- Receive levy funds for you to spend on apprenticeships
- Manage your apprentices
- Pay your Training Provider
- Stop or pause payments to your Training Provider
- Transfer your levy funds to another employer
Apprenticeship Funding for Employers
Understanding the Apprenticeship Levy Transfer Initiative
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