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Apprenticeship Levy Update

08/02/2017

Apprenticeship Funding is Changing

The way that apprenticeships are funded by the government in England is changing in spring 2017....

How is the funding changing?

Some large employers will be required to contribute to a new apprenticeship levy but there will be changes to the funding for apprenticeship training for all employers in some way.

All employers operating in the UK, whether you pay the apprenticeship levy or not will experience changes

Please note: The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017.

From 1st May 2017, some employers will be required to pay for apprenticeships either through the apprenticeship levy or through a co-investment cash contribution.

Levy Payers the FACTS

  • Any UK employer, in any sector, with a PAYE bill of more than £3 million per year is liable to pay the new levy
  • The levy will be 0.5% of the pay bill, paid through PAYE
  • There is an allowance of £15,000 to offset against levy liability
  • Employers will be paid a top-up of 10% of their levy back by the government.

If your payroll is less than £3 million a year, you can still hire apprentices!

Read the current guidance on the apprenticeship levy

Non Levy Payers

If you do not pay the levy, you won’t need to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018.  So do not worrry nearer the time we will be able to give you more information and advice available on how to do so.

When the new funding system comes in effect in May 2017, you can take control and choose the:

  • training you’d like your apprentices to receive
  • an approved training provider
  • an assessment organisation

By using the registers available on the apprenticeship service.

Each apprenticeship framework and standard will be allocated to 1 of 15 new funding bands. Employers and providers will agree a price for the apprenticeship up to the cap of the allocated band.  

Payments for training will be made directly to the provider and you will be able to agree a payment schedule and spread it over the duration of the apprenticeship. 

Most employers will be asked to make a 10% contribution to the cost of this training and the government will pay the rest (90%), up to the maximum amount of funding available for that apprenticeship. This is the upper limit of the funding band will cap the maximum price that government will ‘co-invest' towards. 

If you are an employer with less than 50 employees and are recruiting a 16-18-year-old apprentice, you will not be required to make any cash contribution.

Employers will also receive a £1,000 incentive payment, to be paid through the provider, for hiring a 16-18 apprentice.


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