Apprenticeship Levy Employer Guide


Apprenticeship Levy – Free Consultation Service

We can help you:

  • Understand what the Apprenticeship Levy and its targets mean for your organisation.
  • Clarify your eligible activity and assess the training you do now.
  • Advise on the options open to your organisation.
  • Design and deliver your Apprenticeship programmes by drawing upon our extensive experience.

To get started, and to ensure we get the right person in front of you, please contact us to tell us more about your organisation and we'll be in touch soon.


Apprenticeship Levy Update: 13 October 2016

More news on how the Apprenticeship Levy will be administered

More news on how the Apprenticeship Levy will be administered has come out at the end of last week, with employers required to review their annual pay bill, prior and current year, to confirm their status as a levy payer. Employers will be required to notify HMRC of their levy commitment and make provision to pay the tax.

The draft regulations outline how to calculate the monthly levy allowance and what arrangements are in place for employers who are part of a group as to how levy allowances can be apportioned between multiple PAYE schemes. The information confirms that the annual levy allowance will operate on a monthly cumulative basis.

For example, an annual levy allowance of £21,000 would provide a monthly allowance of £1,750 with any unused allowance being carried over from one month to the next.

More details can be found here.

Apprenticeship Levy Update: 11 October 2016

Apprenticeship Levy calculator

The Skills Funding Agency has produced an online tool that businesses can use to estimate if they will pay the Apprenticeship Levy, how much their organisation will have available to spend on apprenticeships and how much the government will contribute towards the cost of training.

The tool can be accessed here - you will need to know your organisation's annual UK payroll

Apprenticeship Levy Update: 20 September 2016

British Chambers of Commerce: Businesses in the dark on Apprenticeship Levy

On the day that business, government, and education leaders gather in London for the BCC's Business and Education Summit, the British Chambers of Commerce publishes a survey of businesses that shows a lack of clarity among businesses over the government's apprenticeship funding reforms, including the Apprenticeship Levy.

With just over six months to go until the Apprenticeship Levy is introduced, the survey of over 1,600 business leaders across the UK undertaken in August 2016 and supported by Middlesex University, shows that nearly 2 in 5 (39%) business people still have no understanding, or haven't heard of, the Apprenticeship Levy.

Coventry & Warwickshire Chamber Training Executive Director Sally Lucas commented "Commentary around employers need a lot more information and the devil being in the detail around how the apprenticeship reforms, including the apprenticeship levy and wider changes around employers 'owning' the agenda, taking more interest through their own investment in skills and training. This being the government's ambition to drive up the quality and quantity of apprenticeships but for this to be successful and realise those aims, businesses need greater 'detail' around the changes and how they will practically work and impact on business and they need sufficient time to consider the changes, develop partnerships with apprenticeship suppliers and take the necessary steps to make the changes work for them. We are talking with many employers on this agenda and are keen to support Coventry and Warwickshire employers on this journey."

Click here to read the full statement from the British Chambers of Commerce

Apprenticeship Levy Update: 12 July 2016

How will companies outside the apprenticeship levy fund apprenticeships?

Employers who do not pay the Apprenticeship Levy will not need to use the digital voucher to pay for apprenticeship training and assessment until at least 2018. They will need to choose a training provider from the registered list, negotiate the cost of the training and adhere to the funding caps for different qualifications, in the same way as larger firms that pay the Apprenticeship Levy.

Employers that do not pay the levy must contribute "a small proportion" of funding towards the cost of their apprenticeship training. The employer will make an initial payment to the training provider, to meet the provider's payment schedule. The Government will then pay its share through 'co-investment', up to the funding cap limit for that apprenticeship.

The co-investment rate will be published as provisional in June and confirmed in October. The examples below are modelled on a co-investment by Government of £2 for every £1 paid by the employer; however the actual rates could be more favourable, as little as 10%.

All apprenticeship funding will come from the Apprenticeship Levy pot and a proportion of this will be allocated to support apprentices in non-levy paying employers.

Example: Employers who do not pay the apprenticeship levy Employer

A (who does not pay the Apprenticeship Levy) trains an apprentice in Y occupation. The funding cap for this training is £4,000 per year, but the employer negotiates a cost of £3,000 with the provider.

The cost is within the funding band limit, so the £3,000 will be made up of an employer contribution of £1,000 and a Government co-investment of £2,000.

(NB these amounts are illustrative and the actual co-investment rate will be announced by Government in June.)


Employer B (who does not pay the Apprenticeship Levy) trains an apprentice in Y occupation, which is set a funding cap of £6,000. The price negotiated with the training provider is £7,000, so over the funding cap.

The cost is above the funding cap limit, so the employer will pay £2,000 of the £6,000 of training within the funding-cap limit, with a Government co-investment of £4,000. The employer is responsible for the remaining £1,000 over the funding-cap.

Apprenticeship Levy Update: 12 May 2016

Here's a slideshow from ILM with the latest news about the impending apprenticeship reforms.

Apprenticeship Levy Update: 11 May 2016

Here is the latest Apprenticeship Levy update following the release of new information from the Government:

  • Levy-paying employers will be able to create an account with the digital apprenticeship service from January 2017 which will enable them to familiarise themselves with the system. The system can then be used from April 2017 to pay for training and assessment of Apprenticeships. Funds will be clearly visible on the system on a monthly basis.
  • The government will also be introducing a 10% top up in addition to the funds paid by levy-paying employers. For example, the employer pays in £1 but the amount showing in the digital account will be £1.10 (taking into account the government's 10% top up).
  • Funds (acquired through the levy and government top ups) will expire after 18 months. Money paid in works on a first-in, first-out basis which aims to limit the level of fund expiration.
  • Levy paying employers will use the registers available on the digital apprenticeship service to identify training and training providers. Payments will be made using the funds in your digital account. If the amount due, on a monthly basis, exceeds the funds in your digital account, arrangements must be made with your training provider to pay the outstanding balance.
  • Employers not paying the levy will use the digital apprenticeship service from 2018. However, employers will still need to identify the training and training provider through registers available on the digital apprenticeship service. As a "co-investment" approach, the government will partially fund the Apprenticeship (funding levels still to be determined) and the employer will pay the remainder. The employer will pay the training provider directly.

Further information to made available in June 2016.

Apprenticeship Levy Update: 4 February 2016

In the 2015 Autumn Statement, the UK Government outlined plans to increase Apprenticeship participation to 3 million by 2020 by making funding changes and introducing an Apprenticeship levy. Less than 3% of Apprenticeship employers will pay the levy which will generate £3 million annually over the next 5 years.

Smaller companies can still take advantage of available Government funding, which may include an employer contribution.

Key facts

  • The apprenticeship levy will be introduced to large employers who have an annual payroll in excess of £3m, with the first payments due in April 2017 at a rate of 0.5% paid through Pay as You Earn.
  • The levy will apply to all large organisations regardless of whether they already employ apprentices or not.
  • Employers will receive a Government allowance of £15,000.
  • The levy payment will then be ring-fenced in the form of an electronic voucher that can be used to purchase training from recognised providers.
  • The levy is aimed to encourage employers to invest in their apprentices and to take on more.
  • The levy applies to new and existing staff.
  • Employers who pay the levy and are committed to apprenticeship training will be able to get more than they pay into the levy through a top up to their digital accounts.
  • The levy will need to be paid by larger organisations regardless of whether they reclaim voucher funds to purchase apprenticeships.

With the clock ticking away to the introduction of the levy, now is the right time for organisations to review their current apprenticeship scheme, consider the implications of the levy and consider how to maximise the opportunity and minimise the risk.

For organisations that have not yet participated in apprenticeships, this is an ideal opportunity to gain a valuable insight into apprenticeships prior to the levy.

For more information about the apprenticeship levy and how your business could be affected please call us on 02476 231 122 or email us on today.

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