As part of a national drive to train 3 million new apprentices by 2020, the way the Government funds apprenticeships in England is changing.

Employers with an annual wage bill of £3 million or more will be required to pay a levy which will come into effect on 6 April 2017. This levy will be paid to HMRC through the Pay as You Earn (PAYE) process and will replace all taxpayer funding of apprenticeships. All employers will receive an offset allowance of £15,000, the equivalent to 0.5% on a payroll of £3 million.

In addition to this, there will be changes to apprenticeship training which will affect all employers, including the non-levy paying ones.

Non-levy paying employers

By 2020, it is anticipated that all employers will use a new online service called the Digital Apprenticeship Service (DAS) to pay for the training and assessment of their apprentices. Until then, non–levy paying employers will be able to continue to negotiate and agree their apprenticeship programme with their chosen training provider.

The Digital Apprenticeship Service will offer employers a means of being able to:

  • Estimate how much funding to spend on apprenticeships
  • Choose an apprenticeship course
  • Select an appropriate training provider
  • Choose who will assess their apprentice at the end of the course
  • Post their apprenticeship vacancies online

As part of the funding changes, non-levy paying employers will contribute 10% towards the cost of apprenticeship training, which is paid directly to the training provider. The Government then covers the remaining balance.

Funding bands

All existing apprenticeship frameworks and standards will be allocated a funding band. This will range from a scale of 1-15, and each band will outline the maximum amount that:

  1. the Government is willing to contribute to the course (for non-levy paying employers)
  2. the amount that a levy paying employer will have to contribute towards an individual apprenticeship

The amount within these funding bands ranges from £1,500-£27,000. If an apprenticeship course exceeds the funding band limit, the employer will be expected to cover this additional amount in full themselves.

Special exceptions

For employers with fewer than 50 employees, the Government will cover 100% of the costs of training an apprentice who is 16-18 years old, 19-24 year old care leavers or those who have an Education, Health and Care plan. There is additional financial support for employers who take on apprentices who fall into these categories, which is £1000 per apprentice.

Where an apprentice is identified as needing English and Maths qualifications to meet the minimum standard of their apprenticeship, the employer’s chosen training provider will be able to claim £471 from the Government to deliver each qualification.

You can find out more about the apprenticeship reforms and the levy from the Government website.

Need any help or advice regarding the apprenticeship funding rules or training a new apprentice? Speak to our friendly team today.



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