In May 2017, the way the government funds apprenticeships in England will change. Some companies will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers. Employers with an annual salary bill of £3 million or over each year will be required to pay 0.5% of their total bill on the apprenticeship levy.
Use our apprenticeship levy calculator to work out how much you’re required to pay:
An employer who would pay the levy
Employer of 250 employees, each with a gross salary of £20,000
Wage bill: 250 x £20,000 – £5,000,000
Levy Sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual Levy Payment
An employer who would not have to pay the levy
Employer of 100 employees, each with a gross salary of £20,000
Wage bill: 100 x £20,000 – £2,000,000
Levy Sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual Levy Payment
Calculate what you will pay
What is the company's annual wage bill?
Levy Sum: 0.5% x (wage bill) = £0.00
Subtracting levy allowance: £0.00 - £15,000
Got questions? We have got the best answers for you.
Apprenticeships already deliver real benefits to business and young people: new reforms aim to boost these even further.
The government is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The levy will help to deliver new apprenticeships, and it will support quality training by putting employers at the centre of the system. Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.
The levy will be charged at a rate of 0.5% of your annual salary bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay.
The levy allowance will operate on a monthly basis and will accumulate throughout the year. This means you will have an allowance of £1,250 a month. Any unused allowance will be carried from one month to the next.
Once you have paid the levy to HM Revenue and Customs (HMRC), you will be able to access funding for apprenticeships through a new digital apprenticeship service account.
You will be able to use this to pay for training and assessment for apprentices in England.
More information on Accessing money paid under the apprenticeship levy can be found on The Government Website.
If you’ve spent all the allowance in your digital account, or your allowance does not cover the cost of your training, you can use the model that applies to non-levy paying employers. You’ll contribute 10% of your training costs, while the government will contribute 90%.
If you’re an employer, your annual salary bill is under £3 million each year and want to train a member of staff as an apprentice, you will pay 10% of the training costs, while the government will fund the remaining 90%.
The only exception is if you’re a small employer with under 50 employees, your pay bill is under £3 million each year and take on a 16-18-year-old apprentice, your training costs will be fully funded by the government.
You will need to choose the training you’d like your apprentice to receive throughout their apprenticeship. Apprenticeship training can either be on a new apprenticeship standard, or on an existing apprenticeship framework.
If you’re spending funds in your digital account, you must spend it with an approved training provider.
Whether you pay the levy or not, the digital apprenticeship service will help you to:
Profound Group are a government approved training provider, who are included in the register of training providers. We offer high-quality education and training services to employers and have an extensive portfolio of services including apprenticeships.
We’ll work with you to help you understand the levy and develop a plan that aligns your business goals, helping you to analyse and identify skills gaps and recruitment opportunities within your business.
We understand government rules and regulations can be quite daunting, so if you have any questions, please do not hesitate to get in touch.
Additional Payments are available for Apprentices aged 16-18 years old (or for 19-24-year-old care leavers or those that have an Education, Health and Care Plan) This is £1000 per apprentice for the employer.
Where a learner is identified as needing training on Maths and English, then the Training Provider will support them to achieve this. The Training Provider claims a flat rate for this from the government, this is not deducted from the funds in the Digital Apprenticeship Service and employers do not need to make a contribution.
The new apprenticeship funding system will consist of 15 funding bands. The upper limits of these funding bands range from £1,500 - £27,000. All existing apprenticeship frameworks will be placed within these bands along with the new ‘Standards’. The upper limit caps the maximum amount of their digital funds a Levy paying employer will need to pay towards an individual apprenticeship. When an employer does not pay the Levy or has insufficient funds, it will also cap the maximum amount the government will co-invest.
Apprenticeships in England currently follow the Specification of Apprenticeship Standards for England (SASE) Frameworks, which set out the minimum requirements for the apprenticeship.
Under the new apprenticeship reforms, all SASE Frameworks will be replaced by new apprenticeship Standards. During the transition, we will see a period where both are delivered alongside one another. However, once an existing apprenticeship Framework is covered by the new Standard, the out-dated Framework will be discontinued at a point that is reasonably practical.
On-programme training and learning The on-programme training and learning develops the apprentice’s knowledge, skills and behaviours – as required by the Standard. It will include on-the-job and off-the-job learning and where necessary Maths and English. Clear progression milestones may incorporate assessment.
Gateway to the end-point assessment Towards the end of the apprenticeship, employers and providers will ‘sign-off’ the apprentice as ready for the end-point assessment, as specified in each Assessment Plan.
End-point assessment The end-point assessment must demonstrate that the apprentice can perform in the occupation in a fully competent, holistic and productive way. Assessment methods vary by occupation and could be practical, involving work that can be observed. End-point assessment will be delivered by assessment organisations that are on the Register of Apprentice Assessment Organisations (RoAAO). Assessment organisations must be independent of and separate from the individual apprentice’s training. Individual employers have the freedom to select their own training provider and assessment organisation from the RoAAO.