The Apprenticeship Levy came into effect in April 2017. If you pay the Apprenticeship Levy, you should have signed up for a digital account in January. This account is specially designed for organising payment for training and assessment.
The Apprenticeship Levy was announced by the government in the summer of 2015. This Levy comes in the form of a contribution from companies with the highest wages. By 2020, the government hopes to be able to fund 3 million new apprenticeships. All this is going to be paid for by the Apprenticeship Levy.
Less than 2% of businesses are required to pay the Apprenticeship Levy. Those with yearly wages bills of £3 million and above are accessing the digital service.
The government has levied the largest companies to fund, and part fund, apprenticeships across England. Since April, businesses paying the Levy started taking on new apprentices using the digital account system.
The Apprenticeship Levy is a tax of 0.5% of an employer’s annual pay bill, which is paid into the National Apprenticeship Service via HMRC. The apprenticeship funding system is comprised of 30 bands each with its own upper limit. All apprenticeships receive designation to one of these bands. Upper limits range from £1,500 to £27,000. Under the funding system, employers see the maximum amount of funding for each apprenticeship. This enables employers to get the best value from the system.
Employers paying the Levy are able to create an online account. You use this account to choose a training provider and get the funding you need for your apprentices. Apprenticeships are placed in funding bands to give employers an idea of the maximum they should expect to pay for apprenticeship training. Only approved training can be paid for with Apprenticeship Levy funds in your digital account.
The Apprenticeship Levy funds in your digital account are only available to you for training and assessments for your apprentices. The funding is not allowed to be used for any costs associated with employment or wages. You receive financial help up to the maximum in the funding band for your apprentices.
Since its launch in 2010, the apprenticeship programme has already enabled 2.9 million apprentices to learn new skills. By 2020, the government hopes to raise £2.5 billion for apprenticeship training and assessment, creating a skilled workforce.
In order to achieve this goal, the government has developed these new strategies:
• Companies with fewer than 50 employees receive fully funded training
• Businesses taking on apprentices aged 16 to 18 and young care leavers receive full funding
• Those spending over their training allowance benefit from 90% of the costs of training and assessment
• A new register of training providers to help companies make informed choices about training and assessment
The Apprenticeship Levy is essential for making sure that more people have the chance to train as apprentices. Skills minister at the time, Robert Halfon recently referred to the system as a “ladder of opportunity” giving “people of all ages and backgrounds” the chance to become skilled workers.
The government wants to help employers to build a skilled workforce fit to “compete on the world stage”. This is the reason the Apprenticeship Levy started being paid in April. In order to build a better workforce, a high standard of training is required for apprentices.
The register allows employers to seek the best quality providers for their apprentices. Employers are urged to find the best training to meet today’s standards. With the system in place, employers choose specific training from the register of high-quality providers.