The Apprenticeship Levy in England is a government initiative introduced in April 2017 to fund apprenticeship training and encourage investment in workforce development. Here's a breakdown of its background and operation:
Background of the Apprenticeship Levy
Purpose: To increase the quantity and quality of apprenticeships in England
Target Audience: Employers with an annual pay bill over £3 million.
Funds not used by the target audience are available to non-Levy paying employers in the same way but subject to a modest co-investment payment of 5% of the fixed price of the apprenticeship.
Legal Basis: The Levy is legislated under the Finance Act 2016 and administered by HM Revenue & Customs (HMRC).
How It Works
Levy Payment
Rate: Employers pay 0.5% of their total annual pay bill.
Allowance: Each employer gets a £15,000 annual allowance, meaning:
Only employers with a pay bill over £3 million actually pay the levy. For example, a company with a £5 million pay bill would pay £10,000 annually.
Accessing Levy Funds
Digital Apprenticeship Service (DAS): Employers access their funds through a DAS account now part of the Apprenticeship Service on gov.uk.
Monthly Funds: Levy payments are credited monthly into the employer’s account.
Government Top-Up: The government adds a 10% top-up to monthly funds.
Using the Funds
Funds can only be used for apprenticeship training and assessment with a government approved training provider.
Funds can only be used for one of the 650+ apprenticeships developed by employer groups and approved and regulated by the The Institute for Apprenticeships and Technical Education (IFATE) shortly to be transferred to a new Government department called Skills England.
Expiration: Funds expire 24 months after they enter the DAS account if not used.
Employers can:
Choose the type of apprenticeship.
Select the training provider.
Levy Transfers
Employers can transfer up to 25% of their unused funds to other businesses e.g., within a supply chain or industry. We can advise you on how to achieve this.
