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Funding for Apprenticeships

Government funding for apprenticeships changed with the introduction of the Apprentice Levy in 2017. The apprentice levy is designed to encourage businesses to invest in apprentices. Its aims are to:

  • Provide all businesses, regardless of size, with sustainable long-term funding for apprenticeships
  • Give employers control of apprenticeship funding, enabling them to commission custom-built training that will help their businesses to grow.

For apprenticeship funding purposes, employers fall into one of two groups:

  1. £££ Levy-payers (employers with an annual wage bill over £3m)

  2. £ Non-levy-payers (employers with an annual wage bill less than £3m)

The apprenticeship funding guidance given here applies to apprenticeships in England only. Wales, Scotland and Northern Ireland have their own arrangements for funding apprenticeships.

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Apprenticeship Funding for Levy-Paying Employers

The apprentice levy was introduced to secure a long-term funding solution for high quality apprenticeships that better meet employer needs. Although ALL employers will benefit from the levy, in terms of extra funding available for training – only the largest employers will have to contribute towards it.

Example: Employer with an annual pay bill of £5,000,000

  • Levy sum = 0.5% x £5,000,000 = £25,000
  • Subtract levy allowance: £25,000 – £15,000
  • Annual levy payment = £10,000

Levy paying employers will access apprenticeship funding via the new Apprenticeship Service (AS)

What it is and how it works

The apprenticeship service is a computerised service, whereby levy-paying employers use an online account to access their levy fund for training apprentices. Money from the levy can only be used to pay for apprenticeship training with an approved apprenticeship training provider. The AS also holds lists of approved apprenticeship training providers. After choosing an approved provider and negotiating a price for training employers can make payments to them directly from their account.

Special Circumstances

Where a levy paying employer doesn’t have enough in their digital account to pay for their apprentices training, they will receive co-investment at the same level as non-levy payers.

Employers will need to complete an Employer Agreement with the Skills Funding Agency (SFA) to pay Training Providers to carry out apprenticeship training.

Apprenticeship Funding for Non Levy Paying Employers

Employers with wage bills of less than £3 million per annum receive government funding for apprenticeships via co-investment. Employers need only pay 10% of the cost of training, with government funding the remaining 90%.

Extra Support for Small Employers

    Employers with less than 50 employees will not have to contribute their 10% co-investment if their apprentice is:

    • aged between 16-18 years
    • aged between 19-24 and has a local authority education, health & care plan or has been in the care of a local authority.

Key facts about the apprentice levy

  • Only large employers with an annual wage of over £3m will pay the levy
  • The Apprentice Levy will be charged at 0.5% of a company’s gross wage bill
  • HMRC will collect the levy monthly through the PAYE system
  • Government will ‘top-up’ employers monthly levy by 10%
  • Employers will receive an annual allowance of £15,000 to offset against their levy payment
Band Upper Limit Band Upper Limit
1 £1,500 16 £13,000
2 £2,000 17 £14,000
3 £2,500 18 £15,000
4 £3,000 19 £16,000
5 £3,500 20 £17,000
6 £4,000 21 £18,000
7 £4,500 22 £19,000
8 £5,000 23 £20,000
9 £6,000 24 £21,000
10 £7,000 25 £22,000
11 £8,000 26 £23,000
12 £9,000 27 £24,000
13 £10,000 28 £25,000
14 £11,000 29 £26,000
15 £12,000 30 £27,000

 

New funding rates from August 2018 – all employers

From August 2018 all new apprenticeship standards will be assigned to one of 30 funding bands. Apprenticeship standards approved before this time will keep the funding band already assigned to them, until the standard is due for regular review by the Institute for Apprenticeships. Funding bands indicate the maximum that government will contribute towards ‘off the job’ apprenticeship training and end-point assessment.  Employers are expected to negotiate prices with their approved training provider rather than consider the funding band the ‘price’ of an apprenticeship.

Estimate how much funding might be available for your apprenticeship via the government’s online calculator – Estimate My Apprenticeship Funding

For more information on apprenticeship funding download the documents below or you can contact us via our contact form or call us on: 0113 3970 398.