What is the Apprenticeship Levy?

The apprenticeships levy is a new government initiative announced in the 2015 Summer Budget. The government proposes to apply the levy to large employers across all industries. The government is introducing the apprenticeship levy to help fund three million new apprenticeships by 2020.

The levy will come into effect in April 2017 at a rate of 0.5 per cent of an employer’s wage bill, and will be paid through Pay As You Earn (PAYE).

Apprenticeship Levy Details

The long anticipated Apprenticeship Levy update has just been announced.

The announcement outlines the rates all employers will have to pay whether they are affected by the new apprenticeship levy or not, including the new funding bands and incentives.

  • If your wage bill is below £3 million, you will have to pay towards the cost of an apprenticeship. You are expected to pay a 10% contribution and the government will pay the remaining 90%.
  • Levy paying employers (those with annual wage bill over £3 million) will receive a 10% monthly top-up. However, if your levy account is insufficient then like smaller employers, 90% of your additional apprenticeship training costs will be subsidised by government.

Other new announcements within the consultation:

  • A £2,000 incentive to help 16-18 year olds, young care leavers and young people with an Education and Health Care (EHC) plan.
  • Employers with fewer than 50 employees will not have to pay anything towards the cost of training a 16-to 18–year-old apprentice, young care leaver or young person with an EHC plan.
  • An online calculator launched by the government. You will need to know your organisation’s annual UK pay bill to view the results. Please follow this link to use the Government online calculator.
  • All apprenticeship frameworks and standards start from April 2017 and will be funded from 1 of 15 price bands, each with an upper limit ranging from £1,500 to £27,000.  It will then be up to you to negotiate prices with training providers.
  • The apprenticeships funding bands tool shows you which funding band an apprenticeship has been allocated to. Click here to view the funding bands tool.

Click here to view the proposals for how the ‘apprenticeships support package for employers in England’ will work from May 2017.

Further Details

If you wish to discuss this further, please contact us on 020 8831 6353 and we can provide you with advice and guidance on how to invest in your workforce and grow your organisation in a sustainable way. Way2Work are committed to supporting your organisation and look forward to a continued successful partnership.

Apprenticeship Levy Fact Sheet Way2Work