The Apprenticeship Levy

The Apprenticeship Levy is set to come into force in 6th April 2017, the levy will require employers to invest in apprenticeships, with the size of the investment dependent on the size of the business. The information on the levy can be somewhat confusing and we’ve been asked various questions from our customers within our industry.

We have devised a guide to help guide you through how the levy will work and how this might affect your business.

What is the Apprenticeship Levy

  • The levy is applicable to any employer within the UK that has a wage bill of over £3m per tax year
  • If your wage bill is over 3m, the levy will be 0.5% of the wages that you pay, this will be paid monthly through PAYE from April 2017
  • The levy will only affect wages, bonuses, commissions and pension contributions, it will not affect benefit in kind and reimbursed expenses
  • An allowance of £15,000 will offset against levy liability. The levy allowance is not a cash payment and cannot be used to purchase any apprenticeship training
  • The levy payment by each employer will go into their digital levy account, the Government will enhance this by a further 10%. So if £10,000 is paid in through the levy contribution from the employer, the Government will put in £1,000 also into this account.

apprenitce levy image example

Using your levy payments

Levy payments can be used to fund apprenticeships across the organisation, it does not necessarily need to be new members of staff, it could be existing staff that are suitable for apprenticeships and employers can select their chosen training to agree the price for the delivery of  their apprenticeship training. Funds in your digital account will expire within 24 months,

The current apprenticeship frameworks, are being phased out and will not be in existence after 2020. For the Lift Truck Industry, we are working on developing the Trailblazer and we hope to have this standard towards the end of 2017, until then the training will continue as it has done for the Level 2 & Level 3 Apprenticeship in Lift Truck Maintenance and Repair, IMI Awards.

What can you spend the levy on?

Funds in your digital account, and funding provided by the government through co-investment, can only be used towards the costs of apprenticeship training and end point assessment. This must be with an approved training provider and assessment organisation.

It can’t be used on other costs associated with your apprentices or wider training effort. For example wages, statutory licences to practise, travel and subsidiary costs, managerial costs, traineeships, work placement programmes or the costs of setting up an apprenticeship programme.

What if you do not have enough money in your digital account to pay for the Apprenticeship training?

The Government will support to help you meet these additional costs, up to the maximum amount of funding available for that apprenticeship. As both you and government make a payment, we call this ‘co-investment’. This will be set at the same co-investment rate as for employers who do not pay the levy, with government paying 90% towards the extra cost of training and assessment and employers paying the remaining 10%.

How F-TEC can help?

If you are likely to be a levy payer, then we would be more than happy to review this with you and look and the effect that the levy will have upon your business and your apprentices. New information is being release from the Government all the time, and we are actively involved in reviewing the content and attending meetings on the subject, so we will update this section, when any new information arises.