• Funding will be directly in the hands of employers
• Funding will come through the Apprenticeship Levy
• Employers with a wage bill in excess of £3million per year will pay 0.5% of their total wage bill into the Levy minus a Levy allowance of £15,000 from the government for example:
  Annual Wage Bill £10million = £50,000 (0.5%) - £15,000 Levy allowance = £35,000 into your ‘Apprenticeship Levy Pot’.
• The Levy will be payable through PAYE and held in an ‘Apprenticeship Levy Pot’
• There will be a new ‘Digital Apprenticeship Service’ which will allow employers to see how much money is in their ‘pot’ to pay for apprenticeship training
• The government will pay a 10% top up to the funds that you pay into your ‘pot’
• All employers will receive a £1,000 payment for taking on a 16-18 year old on an apprenticeship framework or standard, as well as 19-24 year olds who were formerly in care or who have an Education and Health Care plan. The payment will be made in the third and twelfth month and will initially be made by the training provider. Over time, it is intended that the payment will be made directly from the government.

New Government Apprenticeship Incentives

Increased incentive payments for hiring a new apprentice
Employers will receive £3,000 for new employees of any age who start their apprenticeship from 1 April 2021 to 31 January 2022.

The incentive payment is in addition to the £1,000 employers already receive for hiring an apprentice aged 16 to 18 years old or under 25 with an education, health and care plan or who has been in the care of their local authority.

The levy will be paid by employers in any sector with a pay bill of more than £3 million per year, and will be charged at 0.5%. The levy will be paid to HMRC through PAYE. You will calculate, report and pay your levy to HMRC, through the PAYE process alongside tax and National Insurance Contributions (NIC). 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.

The pay bill will be calculated based on the total amount of earnings subject to Class 1 secondary NICs. Earnings include any remuneration or profit coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on.

You will pay the levy on your entire pay bill at a rate of 0.5%. However, you will have a levy allowance to offset against this. The levy allowance is worth £15,000 for each tax year.

This means the levy is only payable on pay bills over £3 million (because 0.5% x £3 million = £15,000).

Example:
Annual pay bill of £7,000,000
Apprenticeship levy of 0.5% x £7,000,000 = £35,000
Minus £15,000 allowance = £20,000 annual levy payment

Funds will be accessed through a new digital apprenticeship service account. This service is now open for registration. Employers will need to register to create an account, and link it to their PAYE schemes. You will be able to see funds appear in your digital account monthly.

Employers will be able to use this to pay for training and assessment for apprentices in England. The service will also help employers find training providers and assessment organisations.

When you agree to buy apprenticeship training from a particular training provider and the apprenticeship has started, monthly payments will automatically be taken from your digital account and sent to the provider.

The digital apprenticeship service will support the English apprenticeship system. Scotland, Wales and Northern Ireland will have their own arrangements for supporting employers to access apprenticeships.

Funds in your digital account 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.

For employers that wish to provide apprenticeship training themselves, they must become an approved training provider.

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

Government will apply a 10% top-up to the funds you have to spend on apprenticeship training in England. It will be given monthly, at the same time the funds enter your digital account. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10.

Funds will expire 24 months after they enter your digital account if you don’t spend them on apprenticeship training; this will also apply to any top-ups. Your digital account will let you know in good time when any funds are due to expire so that you can arrange to spend them.

If you don’t have enough in your account in a particular month, you will be asked to make a contribution to the extra cost of training and to pay this directly to the provider, rather than through your digital account. You will be able to spread this contribution over the lifetime of the apprenticeship and agree a payment schedule with your provider. To help meet these additional costs, the government will pay 95% towards the extra cost of training and assessment with employers paying the remaining 5%.

All apprentices who started their apprenticeship programme before April 2017 will be funded for the full duration of their apprenticeship under the terms and conditions that were in place at the time the apprenticeship started. If you pay the apprenticeship levy, you will not be able to use the funds in your digital account to pay for these apprenticeships.

Note: If you have an apprentice who is due to complete their current apprenticeship level by April 2017 and is wanting to progress onto the next level, then the new level will be subject to the apprenticeship levy.

Where a group of employers are connected they will only be able to use one £15,000 allowance. If you are part of a group of connected employers, you must decide what proportion of the levy allowance each employer in the group will be entitled to. This decision must be taken at the beginning of the tax year and will be fixed for that tax year.

If you don’t pay the levy, you can still access the digital apprenticeship service to choose the training provider, and assessment organisation for your apprenticeship programme using the registers available.

Employers that don’t pay the levy will be expected to contribute towards the cost of apprenticeship training, and Government will pay the rest (up to the maximum amount of funding available in the band for that apprenticeship).

All employers will receive a £1,000 payment for taking on a 16-18 year old on an apprenticeship framework or standard, as well as 19-24 year olds who were formerly in care or who have an Education and Health Care plan. The payment will be made in the third and twelfth month and will initially be made by the training provider. Over time, it is intended that the payment will be made directly from the government.

Annual wage bill of <£3 million, > 50 employees

Employers who do not pay the levy will benefit from significant government funding to support their commitment to apprenticeships. As of 1 April 2019, Employers will need to make a financial contribution – ‘co-investment’ of 5% of the cost of training and assessment. In the first 12 months employers will need to pay their co-investment directly to training providers, however overtime this will move to a digital account. Payment schedule can be agreed with the provider.

Annual wage bill <£3m, <50 employees

Employers with less than 50 employees will be able to train 16-18 year old apprentices without making a contribution. Apprentices aged 19 – 24, previously in care or who have an educational or health care plan, will also be fully funded. Employers will need to make a financial contribution – ‘co-investment’ of 5% of the cost of training and assessment for apprentices aged 19 and over.

Education and training is a devolved policy, which means that authorities in each of the UK nations manage their own apprenticeship programmes. Government are working with the devolved administrations to make this work for employers that have operations across the UK. The current advice is to contact the relevant apprenticeship authority for more information about funding in other parts of the UK.

Employers can use the digital apprenticeship service whether they pay the levy or not. They will help employers to:

• select an apprenticeship framework or standard
• choose the training provider or providers you want to deliver the training
• choose an assessment organisation
• post apprenticeship vacancies

Employers that pay the levy will also be able to:

• see the funds you have available to spend in England
• set the price you’ve agreed with your training provider
• pay for apprenticeship training and assessment through the digital apprenticeship service
• all employers will be able to use the digital apprenticeship service to pay for training and assessment for apprenticeships

Please check the Skills Funding Agency blog for further information and updates

Changes are occurring all the time, so ensure you register with us so we can keep you appraised of these changes

• We will send you regular email updates, which you can opt-out of at any time
• You will be invited to attend special ‘Apprenticeship Levy’ briefings at various locations around the District at various times of the day and evening to hopefully suit your business
• This link will take you to the government website where you can get the latest updates and more detailed information as it stands at the moment.