In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.
The government is introducing the apprenticeship levy on 6 April 2017. The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.
Who does this guidance applies to?
This guidance is for all employers operating in the UK, whether you pay the apprenticeship levy or not.
The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.
Starting April 2017 a levy will be introduced of 0.5% of your annual wage bill and will be collected via the PAYE system by the HMRC and placed into a Digital Account – there will be an allowance of £15,000 to offset against the planned Levy Payment, this in effect offsets the payment of employer with a PAYE bill of less than £3m. an example of how to calculate your levy is below:
A. Employer of 250 employees, each with a gross salary of £20000
Wage bill: 250 x £20000 – £5,000,000
Levy Sum: 0.5% x £5000000 = £25000
Allowance: £25000 – £15000 = £10000 annual Levy Payment
B. Employer of 100 employees, each with a gross salary of £20000
Wage bill: 100 x £20000 – £2000000
Levy Sum: 0.5% x £2000000 = £10000
Allowance: £10000 – £15000 = £0 annual Levy Payment
The new proposals affect both levied (levy payers) and non-levied employers (non-levy payers) equally. Efforts have been made to simplify the currently complex funding system to make it easier to understand for employers and give better transparency to the apprenticeship funding process. This proposal is being reviewed across the summer and will be finalised following feedback and consultation in October 2016.
Apprenticeships have been split in to 15 “bands” which determine their value-
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Provisional bands have been aligned to the existing Standards & Frameworks which can be viewed here. Where new style apprenticeship standards are not available existing frameworks have transitioned to this model and will continue to be available until suitable standards have been built through industry trailblazers and agreed by the department for Business Innovation and Skills (BIS). Standards are being built to be more robust than the current Frameworks and consequently are worth more than the equivalent Framework.
These amounts are the upper limit and can be negotiated with Bright Direction Training as a provider. When we enter these negotiations you should consider what CPD you require for these staff members to have them fully fit for purpose.
Estimate your levy contributions here.