There were changes made to apprenticeships in England in April 2017, including a new levy for some employers. But do you know how the changes affect your business? See below some of the key things you need to know about the apprenticeship levy and about the other changes to apprenticeships which came in at the same time.
What is the apprenticeship levy?
The apprenticeship levy is a new charge on employers which will fund apprenticeship training and assessment. It came into effect on 6 April 2017 at a rate of 0.5% of the employer’s pay bill.
Who has to pay the levy?
Only employers who have an annual pay bill of more than £3million are liable for the levy, which is paid monthly through the PAYE system. This is less than 2% of UK employers.
What happens to the money?
Funds will appear in an online account for these employers, with an additional 10% added. These funds can be spent on apprenticeship training and assessment.
Employers who don’t pay the levy
Employers who aren’t required to pay the levy will need to make a 10% contribution to apprenticeship training, with the Government making up the remaining 90% to the funding band maximum.
These employers will not be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018. Instead you will need to agree a payment schedule with the training provider and pay them directly.
The new digital apprenticeship service
The funds raised through the levy will be distributed through a new digital apprenticeship service, however the service is not just for employers who pay the levy.
The service will enable all employers (whether they pay the levy or not) to:
- Select an apprenticeship framework or standard
- Choose a training provider
- Choose an organisation to conduct assessments of apprentices
- Post vacancies for apprenticeships
Those employers who pay the levy will also be able to:
- Set an agreed price with a training provider
- Use funds in their account to pay for training and assessment from a government-approved provider
- Pause payments, or stop them altogether
What about apprentices who were working before the levy came in?
The new arrangements will not affect apprentices who started their apprenticeship before 1 May 2017.
Additional help for small businesses
As well as not paying the levy, businesses with fewer than 50 employees are not required to invest 10% of the cost of apprenticeship training as long as the apprentice in question is a 16-18 year old, or an eligible 19-24 year old (one who was formerly in care or has an Education and Health Care plan.)
Action you need to take
If you will be paying the levy you need to register for the apprenticeship service at https://www.gov.uk/guidance/manage-apprenticeship-funds.
If you are not required to pay the levy but do employ apprentices, you should familiarise yourself with the digital apprenticeship service as you will be able to use it for things like finding training providers https://findapprenticeshiptraining.sfa.bis.gov.uk/.
If you’d like advice on whether you need to pay the levy and how it will affect your business, do get in touch.