Apprenticeship Levy Information

Apprenticeship Levy Information

The way the government funded apprenticeships changed. As a result, some employers are required to contribute to a new apprenticeship levy and there are changes to the funding for apprenticeship training for all employers.

Does the apprenticeship levy apply to my business?

You will pay the apprenticeship levy if you are an employer with a pay bill of more than £3 million each year. For the purposes of the levy, an ‘employer’ is someone who is a secondary contributor, with liability to pay Class 1 secondary National Insurance Contributions (NICs) for their employees.

Business owners will not have to increase their Class 1 NI payments for apprentices, as long as the apprentice is under 25 years old, is on an approved UK government standard, and earns less then £967 a week.

How much will business have to pay?

The levy will be charged at a rate of 0.5% of your annual pay bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay. This means you will only pay the levy if your pay bill exceeds £3 million in a given year.

The levy allowance will operate on a monthly basis and will accumulate throughout the year. This means you will have an allowance of £1,250 a month. Any unused allowance will be carried from one month to the next. For example, if your levy liability in month 1 is £1,000 you will not pay the levy and your allowance in month 2 will be £1,500.

If you have some unused allowance in a month, but paid the levy previously in the tax year, you can receive a credit which you can use to offset against your other Pay as You Earn (PAYE) liabilities. The credit will also reduce the amount of levy paid.

This example uses an employer with an annual pay bill of £5,000,000
• Levy sum: 0.5% x £5,000,000 = £25,000

Subtracting levy allowance: £25,000 – £15,000 = £10,000 annual levy payment

How will the fee be paid?

You will calculate, report and pay your levy to HMRC, through the Pay as You Earn (PAYE) process alongside tax and National Insurance Contributions (NICs).

If you have calculated that you will pay the apprenticeship levy, you will need to declare this and include it in your usual PAYE payment to HMRC by the 19th (or 22nd if you report electronically) of the following month.

If you require any further information on the apprenticeship levy, you can find out more by visiting the gov.uk website.

What happens if you don’t spend your levy?

Apprenticeship funds will be taken out of your account 24 months after they enter it, unless you:

• Spend them on apprenticeship training and assessment

• Fund an apprenticeship with another employer through transfer

Can you transfer your levy?

You can choose to transfer your levy up to 50% of levy funds each year to other businesses to pay towards their training and assessment.

Transferring levy funds is a way of supporting other businesses by deciding which sectors, skills or local areas you’d like to fund. For example, you could support the engineering sector across England, or fund digital apprenticeships in your local area, or support any apprenticeships in a particular town or city.

How to pledge your levy funds

You can pledge and transfer levy funds from within your apprenticeship service account by selecting your transfers then create a transfer pledge.

For each pledge you create, you must specify a maximum amount of money available for that financial year. You can then choose from four optional criteria to reflect your priorities for transferring your levy funding: location, sector, type of job role, apprenticeship or qualification level. Each pledge is shown on a public website so that any business can apply to you for levy transfer funding. The government will automatically approve applications that match all of your criteria. If you do not add specific

criteria then all applications will be approved by default.

How to make a transfer to a business you know

You can transfer levy funds to a business you know if you have their apprenticeship service account ID. In your apprenticeship service account, select ‘finance’ then ‘manage transfer connections’. Enter the apprenticeship service account ID of the selected business then wait for them to accept the transfer connection. Then agree the apprenticeship training details and cost when they’ve been added to the service by the business receiving a transfer. Receiving a Levy transfer from another business. Here is a useful link for further information.

Receiving a Levy Transfer from another business to fund an apprenticeship

You can view available transfer opportunities on the pledge page. Employers may decide to transfer their levy to specific sectors or businesses. They may also choose to fund particular levels of apprenticeships. Employers can advertise transfers with four details: location, sector, type of apprenticeship, and apprenticeship level.

You can apply for the pledge that matches the levy employer’s needs. This isn’t limited, and you can apply for a pledge even if you don’t match all four advertised details. You can also apply for multiple pledges.

Here is a useful link for information.

How to apply for a transfer

You need an apprenticeship service account to apply for a transfer to fund an apprenticeship for your business. Before logging into your account and starting the process you need to:

• know which apprenticeship standard your apprentices will be undertaking

• know how many apprentices you need funding for

• know the location of where your apprentice will be working from

• know the expected apprentice start date

You can apply for multiple apprentices within one application if they are doing the same apprenticeship. If your apprentices are doing different apprenticeships, you need multiple applications. Once you have applied for a transfer you can see the status of your application in your apprenticeship service account. Your application is shared directly with the employer. They will review and confirm if they have accepted your application. If your application is rejected, you can apply for another transfer or get funding via reservation.

Use the apprenticeship service

If you are new to apprenticeships, you can create an account on the apprenticeship service to:

• access and manage apprenticeship funding

• receive a transfer of apprenticeship funds where eligible

• advertise vacancies on find an apprenticeship

• choose an apprenticeship training course and find a training provider

• select suitable end-point assessment organisations

• give feedback on apprenticeship training

• give training providers permission to carry out some tasks on your behalf

As an employer who pays the apprenticeship levy, you’ll be able to:

• Add PAYE schemes you want to use for apprenticeship funding

• Add your organisations contracting with training providers

• Transfer a maximum of 50% of your unused annual funds to other employers

For more information on managing apprenticeship funds click here.