Introduced in April 2017, the apprenticeship levy is a charge to some UK employers to fund new apprenticeships. The levy is currently payable by all employers with an annual pay bill of more than £3 million at a rate of 0.5% of their total pay bill.
In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. Each employer will receive an allowance of £15,000 to offset against their levy payment.
The levy was introduced so the government could increase productivity by developing vocational skills and increasing the quality and quantity of apprenticeships. It allows employers to get back more than they put in by training sufficient numbers of apprentices.
It was thought that the levy would lead to increased profitability for businesses, and increase wages over the long-term.
Levy funds can pay for Apprenticeship training and assessment. This must be with an approved training provider and a registered end-point assessment organisation.
They cannot pay for Apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships or the costs of setting up an Apprenticeship programme.
The levy funds sit in a digital ‘apprenticeship service’ account, used by employers to fund apprenticeship training provision. The account is used to manage levy funding, track apprentices, find training providers or transfer unused funds.
Any levy funds are topped up each month with a 10% government contribution. Any levy funds expire after 24 months, so it is vital to utilise your Levy as soon as possible.
Once a programme and training provider has been selected and a price agreed, your provider will be paid out of your digital account every month. Apprenticeship levy rules state that your levy must only be used to pay for apprenticeship training and End-point Assessment. They cannot be used to pay apprentice wages.