The Apprenticeship Levy

The Apprenticeship Levy was introduced in April 2017

The Apprenticeship Levy was introduced in April 2017.  The Levy affects all employers whose annual paybill is over £3 million.

A company with a paybill of £5 million will pay 0.5% of this per year

  • That is £25,000.
  • There is an allowance of £15,000.
  • So the final amount paid will be £10,000 per year.

As an employer you can draw against your levy contribution to pay for apprenticeship training across your business.  The Government will also top up a levy account with an additional 10% contribution.

It is important to note that the levy covers the training costs for the apprentice.  Employers will be required to pay an apprentice’s wages in the usual way.  There are however financial incentives for employing an apprentice such as no employer National Insurance contributions to pay for an apprentice aged under 25 years old.

There is an incentive payment of £1,000 from government to employers and training providers when they take on 16-18yr old apprentices.  This payment also applies to 19-24 year old apprentices who were in care, or who have a Local Authority Education, Health and Care plan.

For employers who are non-levy payers the government will contribute 90% of the training cost.

Small employers who do not pay the levy but take on apprentices who are 16-18 years old, 19-24 yr old care leavers or 19-24 yrs old with an Education and Health Care Plan, will receive 100% of the cost of training from government.

Funds will stay in an Employers digital account for a period of 2 years. If the funds are not used in that time the employer will loose them.

When an employer has used all the funds in their digital account they can access further apprenticeship training with just a 10% contribution to the costs. The Government will fund the other 90%.

Important to know:

  • The Apprenticeship Levy was introduced in April 2017 and affects all employers with a payroll over £3m.

  • The Government will top up an employers levy contributions with an additional 10% in their digital account

  • Payments are drawn from the digital account to cover the training costs for the apprentice

  • Additional training requires a contribution of just 10% from the employer

Contact us to find out more