Apprenticeship Reform Information – Funding
How Apprenticeship standards and frameworks are paid for depends on whether the employer pays the Apprenticeship levy or not. Large UK employers with a pay bill of £3million or more pay an Apprenticeship levy.
UK employers with a pay bill of £3million or more will pay an Apprenticeship levy. They can access this money through their digital account on the Apprenticeship Service, and it can only be used for Apprenticeship training and development in their own organisation. If they don’t use the levy funds within two years’ then it goes back to the Government. If they use all their levy and want to train more Apprentices, they’ll pay for them using the same model as an SME. The levy is collected by HMRC via the PAYE process. There is a £15,000 allowance and the Government will top-up monthly funds for Apprenticeship training by 10%. No employer is exempt.
Employer with a pay bill of £50,000,000
Levy sum: 0.5% x £50,000,000 = £250,000
Allowance: £250,000 – £15,000 = £235,000
After 10% top-up = £235,000 + £23,500 = £270,500 levy funds available to spend
Employers control where they spend their Apprenticeship funding. The providers they elect to provide Apprenticeship training will receive that money through their monthly Individualised Learner Record (ILR) return.
Non-levy paying (micro-businesses and SMEs)
SMEs with a pay bill under £3million contribute 5% of the total Apprenticeship cost and the Government pays the remaining 95%. The same model is used for levy-paying employers who have exhausted their funds.
The Government will fund 100% of the cost of Apprenticeship training for a 16-18 year old for businesses with fewer than 50 employees.
For more information on how to manage your Apprenticeship training programme and funding, please contact Vogal and we will be happy to assist.