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The Apprenticeship Levy – Are You Ready?

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

On 6 April 2017, the way in which apprenticeships in England are funded changed. Some employers are required to pay a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.

The levy applies to all UK employers across all sectors, although different arrangements apply for how apprenticeship funding will operate in Scotland, Wales and Northern Ireland. The levy is set at a rate of 0.5 per cent of an employer’s wage bill, excluding other payments such as benefits in kind, and will be collected by HM Revenue and Customs (HMRC) via the PAYE system. Employers will receive an annual allowance of £15,000 to be offset against the levy payment. The effect of this allowance is that the levy will only be payable by employers with wage bills in excess of £3,000,000 (estimated as fewer than 2 per cent of employers). Those with a lower wage bill will not pay anything.

The Government has published guidance explaining the principles on which the levy will work and the principles on which apprenticeship funding will operate from 1 May 2017. The guidance is aimed at all employers, not just those who will pay the apprenticeship levy. The topics covered are:

  • Paying the apprenticeship levy;
  • Accessing your levy money using the apprenticeship service;
  • Employers who operate in England and other parts of the UK;
  • Buying apprenticeship training and assessment;
  • What you can spend apprenticeship funding on – all employers; and
  • Eligibility for training and assessment.

 

The guidance can be found at https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work#accessing-your-levy-money-using-the-apprenticeship-service.

Once employers have declared the levy to HMRC, they will be able to access and manage funding for apprenticeships through a new apprenticeship service account. Registration for the apprenticeship service is now available to all levy-paying employers at https://www.gov.uk/guidance/manage-apprenticeship-funds.

The introduction of the levy will not affect the way in which training for apprentices who started an apprenticeship programme before 1 May 2017 is funded. Employers will need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship commenced.

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