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.
Over £3 Million Annual Wage Bill
What is The Apprenticeship Levy?
Over £3 Million
Over £3 Million
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
| 16-18 Year Olds | 19 – 24 Year Olds (If have EHC Plan or Care Leaver) |
All Other Apprentices or Employees with 50+ staff | |
| Employer Contribution | 100% | 100% | 100% |
| Government Contribution | 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.
New Employer Incentive
Government Announcement:
- 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.
FAQs
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.
Only if your organisation has an annual PAYE wage will of over £3 million.
No, levy funds can only be used for apprenticeships, they cannot be used to purchase any other forms of training.
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.
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.
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.