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The Levy

The Apprenticeship Levy explained

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Frequently Asked Questions

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The Apprenticeship Levy

From 2017 the national apprenticeship program will be expanded by the introduction of the Apprenticeship Levy. The aim of the levy is to fund 3 million new apprenticeships by 2020, encouraging businesses to employ apprentices or retrain their existing staff.

The Levy F.A.Q.
Your business will have to contribute towards the levy if your annual wage bill is in excess of £3 million.
The levy will be charged at a rate of 0.5% of your annual pay bill. However, you will be given a levy allowance of £15,000 per year to offset against the levy you must pay.
You will pay the Levy through HMRC, through the PAYE process alongside the normal tax and NICs.
The Levy payment will deducted from your corporation tax contribution.
If you contribute to an existing industry training levy, you will still be required to pay the new apprenticeship levy.
Once you have declared the Levy to HMRC you will be able to access funding through the new digital apprenticeship service account.
The digital apprenticeship service account will be used to pay for training, and help you find training providers.
Employers who pay the Apprenticeship Levy and provide Apprenticeships will be able to allocate their Levy contributions as digital vouchers to use to train their Apprentices. This voucher system only applies for Employers in England.
Online tools are being made available for employers and you will be able register your account from January 2017. Once registered, verify your PAYE schemes and link them to your account.
The Levy will be introduced on 6 April 2017. Eligible employers will have to declare their liability to HMRC in May 2017 for levy due on their April wage bill. Training funds for Levy paying employers will be accessible in the digital apprenticeship service account after 22nd May.
The Levy funding in the form of digital vouchers will expire 18 months after they enter your digital apprenticeship service account unless you spend them on apprenticeship training.
The cost of an apprentice is spread over the duration of the apprenticeship training. The new system will pay training providers one month in arrears for training they deliver. The payments for the training will be taken directly from the digital apprenticeship service account monthly. Therefore, the account will receive funds monthly as the business contributes towards the Levy and is deducted monthly to cover the truing costs of the chosen apprentices.
The price will cover the delivery of apprenticeship training towards a specific standard or framework, and the cost of assessing the apprentice. The training costs will be taken from your apprenticeship service account and payed directly to us.
Co-investment is intended for employers, who at present are not required to contribute to the Levy, but would still like to take advantage of apprenticeship training. Co-investment means that the government contributes some of the training cost to the training provider. This contribution will cover the delivery of apprenticeship training towards a specific standard or framework, and the cost of assessing the apprentice. The co-investment rate will be set each year, for the proportion of the money that you need to pay and the proportion the government will pay. Co-investment can also be used if you negotiate a price with your training provider that is more than the maximum allowed by the funding band, and then you must pay the difference between the band maximum and the agreed price.
Due to the Levy being introduced early 2017 now is the time to start organise your training requirements for the forthcoming year to take full advantage of the apprenticeship training funds available. We can help you assess your needs and have the correct apprenticeship training available.

Use the online tool for employers to estimate your levy contribution


Apprenticeship employer helpline

  08454 309009



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Andy Turner

Director of Advanced Services at Cisco