The Apprenticeship Levy: What Do You Need to Know?

The apprenticeship levy has been in place since April 2017. But if you’ve not taken on any apprentices since then, you might not understand how it could benefit you. It’s a fantastic way to reduce the costs of training staff, which is an important aspect of running a business.

There’s much more to the apprenticeship levy than simply providing the necessary finance. Here, we guide you through everything you’ll need to know about it.

What the apprenticeship levy is

The apprenticeship levy provides extra funding for apprenticeship schemes. The idea behind the funding system is to enhance the quality and quantity of apprentices in order to encourage employers to invest in them. Therefore, the way apprenticeships are run has been reformed, and there’s new information you’ll need to know if you decide to take on apprentices in the future.

A levy of 0.5% is applied to UK businesses whose wage bills total over £3million per year, and the government tops the levy up by 10% each month. It’s reported and collected using the PAYE system, and the first £15,000 of these businesses’ wage bill is offset against the levy payment.

Funding for apprentices

Businesses that aren’t required to contribute to the apprenticeship levy can still receive funding help for apprenticeships. ‘Co-investment’ will be implemented – this is where the employer pays 10% of the cost of training and assessment, and the government pays the rest, providing it’s under the funding band maximum (which we will discuss below).

If you choose to take advantage of the apprenticeship levy, you’ll have an apprenticeship service account. This is where the funds will be available for you to spend on the training for apprentices, and it’ll be where the training provider is paid also.

apprentices outside a college steps

Rules around the funding

The apprenticeship levy funds will expire 24 months after they arrive into your account, and they can only be spent on the training and assessment for apprentices working at least 50% of the time in England. The funds can’t be used for other apprentice costs, like wages, travel and subsistence, and work placement programmes.

Only the English apprenticeship system is supported by this levy. If you employ workers both here and outside the country, then the amount of finance available will be dependent on the number of employees living in England, and the proportion of your wage bill that’s paid to these workers.

Funding bands

Funds can only be used up to the funding band maximum for that apprenticeship. If your costs do exceed the funding band maximum, then you’ll be required to pay the difference.

The traditional structure was split into fifteen bands that determined their value. But from 1st August 2018, there is a new band structure with thirty bands that have less increments between them. You can figure out the band for your apprenticeship on the government website.

Choosing an apprenticeship type

One of the reforms to the apprenticeship system is that employer groups called ‘trailblazers’ now have more control over how apprenticeships are handled, instead of it falling to the training providers, colleges and awarding bodies.

They design apprenticeship standards – these are one type of apprenticeship that employers can choose. Every standard covers a specific occupation and sets out the essential skills, knowledge and behaviours necessary. The other type of apprenticeship is frameworks, which are a series of vocational and professional qualifications that relate to work, along with training based in both the workplace and classroom.

an apprentice working on a car as part of the apprenticeship levy scheme

Apprenticeship assistance

The Institute for Apprenticeships helps with the system, overseeing the regulation, design and delivery of the apprenticeships. There’s also the Apprenticeship Service,  which allows you to search the register for approved apprenticeship assessment organisations.

DAS stands for Digital Apprenticeship Service.  This no longer exists, it just called the ‘Apprenticeship service’. Bright Direction Training, for example, is on their registry. For those in the public sector, you’ll be required to abide by the Public Contracts Regulations 2015 when choosing a provider.

Selecting a training provider

When you pick your provider, you’ll need to enter into a financial arrangement with them, no matter the size of your business. Ensure you choose one that doesn’t tell you what learning should be involved in the training, allowing you to determine what will work for your business.

This is exactly what Bright Direction Training does. We enable you to design, build and create a course to suit your business, giving you the best chance of providing a successful apprenticeship.

We’re completely flexible to your needs, allowing us to achieve the results you require in sufficient time. With our apprenticeship levy assistance, you can create the future leaders of your business. To find out how we could help your organisation, get in touch with us today.

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