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Over £3 million annual wage bill

What is the Apprenticeship Levy?
In 2017 the government changed the way Apprenticeships are funded. Employers are categorised into Levy and non-Levy payers depending on the size of their annual wage bill.

Key Facts

  • Employers with an annual wage bill of over £3 million will contribute to the Apprenticeship levy
  • Employers with an annual wage bill of less than £3 million will not contribute to the Apprenticeship Levy
  • 5% of the annual wage bill will be paid into the Digital Apprenticeship Service (DAS) monthly
  • The vast majority of employers will not contribute to the Apprenticeship Levy
  • Apprenticeship starting after May 1st 2017 are enrolled on the new funding arrangements
  • All employers will receive a 10% top up into their DAS account.
  • The full cost of the Apprenticeship course will be deducted from the DAS account

Employers with 49 employees or less will contribute:

16 - 18 year olds19 - 24 year olds (if have EHC Plan or Care Leaver)All other apprentices
Employer pays100%100%100%
Government contribution to training provider 0%0%0%
Additional funding available£1000 employer incentive £2000 additional government incentive for starts between 1st August and 31st January£1000 employer incentive £2000 additional government incentive for starts between 1st August and 31st January£1000 employer incentive £2000 additional government incentive for starts between 1st August and 31st January

 

In addition, if an Apprentice needs to study English and maths the government will pay 100% of this.

Government Announcement: New Employer Incentive

  • Applies to Apprentices that are new to the business only – i.e. not existing or recent employees.
  • Paid out to all employers regardless of annual wage bill.
  • Only applies to new starts between 1 August 2020 and 31 January 2021.
  • Your business could be entitled to £2,000 for each new Apprentice under the age of 25 or £1,500 for each new Apprentice aged 25+.
  • New Apprenticeship incentive is in addition to the existing £1,000 payment the government provides for new 16-18-year-old Apprentices and those aged under 25 with an Education, Health and Care Plan.
  • Employers can apply for funding via the Apprenticeship Service.

Example
Employer A (annual wage bill over £3 million) chooses Peterborough College to be their training provider and takes on an apprentice who is 18 when they begin their apprenticeship.

The value of the apprenticeship is £9000.

16 - 18 year oldsPayment
Employer A pays Peterborough College100%£9000
Government pays to training provider0%£0
Employer A receives grantYes - Apprenticeship incentive and new government incentive £3000

FAQs

What is the Apprenticeship Levy?
Employers with an annual wage bill of over £3 million will contribute 0.5% of their PAYE bill into a digital account. This digital account can then only be used to pay for apprenticeship training for either current employees or new hires.

Does the Apprenticeship Levy effect my organisation?
Only if your organisation has an annual PAYE wage will of over £3 million.

Can employers use their digital account for any type of training courses?
No, levy funds can only be used for apprenticeships, they cannot be used to purchase any other forms of training.

What happens to the money once it is paid under the levy?
The money is automatically collected by HMRC and deposited into the employer’s digital account. The funds deposited will be made available via the Digital Apprenticeship Service (DAS) account, through which employers will be able to pay for apprenticeship training.

If an employer fails to spend their Levy contribution, what happens to the funds?
Employers have 24 months to spend their levy contribution, failure to do so results in the government taking the funds to spend on apprenticeships. Use it, or lose it.

What happens if I spend all my Levy but still want to recruit Apprentices?
It is still possible for employers who spend all their levy to still recruit Apprentices. This will result in employers being charged a 5% co-contribution towards the Apprenticeship costs which will not come from the levy fund and will need to be funded by employers.

For advice and guidance regarding the Apprenticeship Levy and how we can help your business, please call our business development team on 01733 762121 or email business.development@peterborough.co.uk.

Downloadable documents

Apprenticeship Funding Policy Overview

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