28th September 2017

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Apprenticeship Levy funding for schools that are part of a trust

The Apprenticeship Levy’s been in place for nearly six months, but many schools - particularly those that operate as part of a trust have yet to get to grips with how much funding they’ll be able to take advantage of.

In this guide, we’ll set out how Apprenticeship Levy funding works for trust schools and how to make a case to ensure your school gets its fair share.

How Apprenticeship Levy funding works for trust schools

The Apprenticeship Levy applies to any organisation that has an annual payroll of more than £3 million a year. For the purposes of the initiative, trust schools are treated like a group of companies - which are classified as a single entity.

So while your school might not fall under the scope of the Levy on its own, when combined with the rest of educational institutions that make up your trust - the overall annual pay bill may exceed £3 million.Apprenticeship Levy MATs

In some marginal cases, it’s entirely possible for a Levy-paying organisation’s payroll to skirt the £3 million mark, which means they may pay Levy contributions some months, but not others - which has a knock-on effect of the amount of Levy funding they’ll be able to take advantage of.

How trusts pay the Apprenticeship Levy and recoup their funds

While every organisation gets a £15,000 allowance on Levy contributions, since trust schools are considered as a single group, they’ll only get a single allowance, which can be parcelled out in a variety of ways.

Trusts can opt to spread this out evenly among all their constituent schools, group it in one institution or pick a select few to use it on. This set-up has to be decided at the start of each tax year and is then fixed for 12 months (unless miscalculations prompt a correction).

Based on how this has been split, trusts will work out the contributions of each individual school and typically, group their funds by associating disparate PAYE (pay as you earn) schemes with a single Apprenticeship Service account.

Contributed Levy funds are paid via PAYE and HM Revenue and Customs will confirm they’ve received the appropriate amount with The Department of Business, Innovation and Skills, which will then add the appropriate sum to the trust’s Apprenticeship Service account - plus a 10 per cent top up.

It’s completely up to trusts how to deploy their Levy funds and the type of training to procure, but once they’ve decided on a strategy - they can begin the process of commissioning an apprenticeship training provider, who is paid directly via the Apprenticeship Service.

Time limits and PAYG

Through the ‘sun-setting’ process, any funds that aren’t used will be removed from a trust’s Apprenticeship Service account 24 months after they’re added.apprenticeship levy umbrella trust

The Levy is paid on a pay-as-you-go basis, so it’s well worth highlighting that this clock started ticking the instant your trust’s first set of contributions arrived in its account.

Similarly, training is also paid for in a pay-as-you-go structure, which has caught some employers out, who previously thought they could hold off deciding how to deploy their funds until much further down the line.

For instance, if your trust pays £9,000 each month into the Levy and was thinking of investing in a £9,000 standard, which took two years to complete, after subtracting the cost for end-point assessment (which we’ll assume is 20 per cent of the overall cost), you’d pay £300 a month over the course of the standard.

It’s therefore better to start the ball rolling sooner, rather than later, to avoid a mad dash to use up your Levy funds on training before the sunsetting process kicks in.

Getting your fair share

Trusts have complete autonomy in how they allocate their Levy funds to their constituent schools and while some are opting to split it evenly, others are conducting a trust-wide initiative to audit extant and emerging skills gaps before deciding where to deploy their Levy training budget.

It can be good practice to make a case for your school’s share by pre-empting this and developing your own ‘people plan’. This involves examining your current staff roster, the qualifications they’ve got and highlighting courses that could be beneficial in meeting your workforce development needs.

Your turn

Hopefully, we’ve managed to shed some light on the ins and outs of Apprenticeship Levy funding for trusts, but every trust is different and there’s no one-size-fits-all solution that can be easily applied.

If you’ve got any questions about the topics we’ve covered in this guide, or anything related to the Apprenticeship Levy for schools - don’t hesitate to get in touch today. You can find us on Twitter, LinkedIn or contact us for a one-on-one chat the old fashioned way:

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