How does the Apprenticeship Levy work in practice? This article outlines the key changes in how employers are affected. The government have changed the way apprenticeships across England are funded. Key employers paying the most in wages each year are required to foot the bill. Funds are accessed through an online account system.
Who is affected?
Employers across England are affected by the changes that have happened. The way that employers arrange, pay for, and access apprenticeships and training has changed. All this is made possible through a digital account system. Employers paying the most per year in wages contribute the highest amount of Apprenticeship Levy.
If your yearly pay bill is less than £3 million there is nothing to pay, but you’re still able to access funds to arrange and pay for training and assessment from 2018. The digital account system was implemented to guide employers through the process of selecting and paying for apprenticeship training.
How does the Apprenticeship Levy work?
The Apprenticeship Levy works by ensuring that funding is available for approved apprenticeship training. Employers paying the most wages each year wpay 0.5 % of their pay bill as an Apprenticeship Levy. This is paid through PAYE to the HRMC. Funding is made available through a digital account available for employers wanting apprentices.
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.
Your Apprenticeship Levy funds
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.
What if my apprentices started work before April 2017?
If your apprentices started working before April 2017, the apprenticeships are funded in line with your previous arrangements. Funds in digital accounts are not to be used for this purpose. New apprentices stand to benefit the most from these changes.
What if my account doesn’t contain enough money to cover the costs?
You don’t need to gain access to the total cost of training and assessment at the beginning of the tax year. This is because your training providers will get paid each month. Employers gain access to a Levy allowance which accumulates as the year progresses. This reimburses you with the money you spent on training and assessment for your apprentices.