What is the Apprenticeship Levy?
In April 2017, the way the government funds apprenticeships in England is changing with the introduction the Apprenticeship Levy. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.
The apprenticeship levy requires all employers operating in the UK, with a pay bill over £3 million each year, to make an investment in apprenticeships. You can benefit from this investment by training apprentices.
The Levy will be payable by all employers in the UK at 0.5% of pay bill and paid through PAYE alongside income tax and National Insurance. Each employer will receive one allowance of £15,000 to offset against their Levy payment. This effectively means that the Levy will only be payable on a pay bill in excess of £3 million per year. However, this does not mean that the Levy will not be payable by small schools.
There will be a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls will only be able to claim one allowance. This also means that schools who are part of a larger group, such as a Local Authority or Multi-Academy Trust, may still be subject to the levy because the group payroll is in excess of £3 million per year.
Please use our levy calculator on the right to work out your annual levy payment.
Your pay bill will be based on the total amount of earnings subject to Class 1 secondary National Insurance Contributions (NICs). Although earnings below the secondary threshold are not counted when calculating an employer’s NICs, they will be included for the purposes of calculating the amount of levy the employer needs to pay.
Earnings include any remuneration or profit coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on. The government will not charge the levy on other payments such as benefits in kind, subject to Class 1A NICs.
Once you have paid the levy to HM Revenue and Customs (HMRC) you will be able to access funding for apprenticeships through a new Apprenticeship Service account.
You will be able to use this to select National Schools Training as your Training Provider and pay for training and assessment for apprentices in England. National Schools Training (UKPRN 10028941) is the only national schools-focussed training provider listed on the Register of Training Organisations (ROTO).
You will be able to create your login to DAS from January 2017. We will be publishing a series of free training modules on our Schools Portal system to guide schools through this process.
You will be able to see funds appear in your digital account monthly, a few working days after you have confirmed your pay bill and levy contribution to HRMC for the previous month. The funds available to spend will be 10% greater than your levy payment as you will receive a 10% top-up from government. The first time you will see any funds in your digital account will be late May 2017.
Funds will expire 18 months after they enter your digital account unless you spend them on apprenticeship training. This will also apply to any top-ups in your digital account. For example, funds entering your account in September 2017 will expire in March 2019, unless you have spent them. Money is spent when it leaves your digital account as a payment to a training provider.
The account will work on a first-in, first-out basis, through either payment or expiry. Whenever a payment is taken from your digital account it will automatically use the funds that entered your account first. This will minimise the amount of expired funds.
Through your Apprenticeship Service account, you will be able to:
- Select the apprenticeship framework or standard
- Choose National Schools Training as your training provider
- Choose an assessment organisation
- Post apprenticeship vacancies.
The Levy will be introduced from 6th April 2017.
If you want to know more about how National Schools Training can help your school to prepare for the Apprenticeship Levy, please call 0844 249 0722 or email email@example.com
The Government will ask you to make a 10% contribution to the cost of apprenticeship training and the Government will then pay the rest, up to the maximum amount of funding available for that apprenticeship with this money being paid directly to the provider.
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