Apprenticeship Funding –

Levy & Non-Levy

What is an apprenticeship levy?

The apprenticeship levy is a compulsory scheme to provide funding for apprentice training.

The levy applies to any employer that has an annual wage bill of more than £3 million. (You will still be impacted by these changes if your wage bill is under this so read on to find out more).

This scheme only supports apprenticeships in England.

Apprenticeship funding is a devolved issue so each of Scotland, Wales, and Northern Ireland have their own arrangements for supporting employers to access apprenticeships.

The Government believes that apprenticeships are good for business, and a great way to develop the skills of the workforce both now and in the future. The aim of the apprenticeship reforms is to deliver more apprenticeships of a better quality, to help improve economic productivity.

The levy is only part of the Government reforms that are being rolled out. The levy is paid directly to HMRC through the PAYE process.

Apprenticeship levy payments are a deductible expense for Corporation Tax. The levy payment is 0.5% of the employers’ annual total UK wage bill

Apprenticeships for Non-Levy Employers

Employers will pay 5% towards the cost of the apprenticeship and the Government will pay the other 95%, up to the funding band maximum. This was changed from 10% in April 2019.  However, some* training does qualify for 100% funding from the Government.

Currently, non levy-paying employers are unable to use the apprentice service to pay for apprenticeships. Instead, the employer must pay the training provider their 5% contribution directly and the provider will then claim the rest from the Government. 

 

* Employers with fewer than 50 employees will be able to provide training without making a contribution towards the costs of training and assessment for the following:

  • 16-18 year old apprentices
  • 19-24 year old care leavers
  • Learners who have an Education, Health and Care plan

The Government will pay 100% of the training costs for these individuals.

Cost & Funding Breakdown

CourseCost5% Contribution
Level 2 Childcare£2,000£100
Level 3 Childcare£2,500£125
Level 2 Team Leading£1,500£75
Level 3 Management£2,000£100
Level 2 Business Admin£2,000£100
Level 3 Business Admin£2,500£125

Incentives

The government offers an additional grant of £1,000 to support employers recruiting, employing and retaining young apprentices.

There are 2 areas of entitlement for this:

  • Aged between 16 and 18 years old (or 15 years of age if the apprentice’s 16th birthday is between the last Friday of June and 31 August); or
  • Aged between 19 and 24 years old and has either an Education, Health and Care (EHC) plan provided by their local authority or has been in the care of their local authority.

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