The Apprenticeship Levy

The government has reformed the way apprenticeships are delivered and funded in England. Its ambition is to increase the number of high-quality apprenticeships that meet the needs of employers. 

Apprenticeship Levy

As part of the reforms apprenticeships are more rigorous, better structured, independently assessed and more clearly aligned The reforms address the skills shortages reported by many industries and help keep the UK internationally competitive. Most importantly, apprenticeships offer high quality opportunities for people to develop their talents and progress their careers.

Through the apprenticeship service on GOV.UK employers can plan and manage their apprenticeship programme, giving them greater control over their apprenticeships and account funds. The apprenticeship service is made up of the following:

  • Estimate my apprenticeship funding allows employers to calculate whether they will pay the apprenticeship levy or not, and how much they will have available to spend on apprenticeships. It also shows all employers how much the government will contribute towards the cost of training.
  • Find apprenticeship training gives employers easy-to-digest information on the choices available to them. They can easily search for and find a standard, framework and training provider, and compare one provider with another.
  • Recruit an apprentice is a new platform through which training providers can post vacancies and manage applications for apprenticeships and traineeships. This will be opened up to employers at a later date.
  • Find an apprenticeship and Find a traineeship are the recruitment sites that enable employers to advertise their vacancies for free and find candidates who match their criteria.
  • Manage apprenticeships allows registered levy-paying employers to view their account balance, manage their apprentices and approve funds to pay for their apprenticeship training.

For levy-paying employers

If you’re an employer with a pay bill over £3 million a year, you must pay the apprenticeship levy from 6 April 2017. You will report and pay your levy to HMRC through the PAYE process. Less than 2% of UK employers pay the levy. In England, the government will top up employers’ levy with an extra 10%, paid directly to employers’ apprenticeship accounts. An employer’s pay bill is made up of the total amount of the employees’ earnings that are subject to Class 1 National Insurance contributions, such as: wages, bonuses, commissions, pension contributions.


For non-levy paying employers

By 2020, all employers will be able to use the digital apprenticeship service to pay for training and assessment for apprenticeships. Until then, non-levy paying employers will be able to continue to negotiate and agree their apprenticeship programme with their chosen training provider. 90% of non-levy paying employers’ apprenticeship training and assessment costs in England will be paid for by the government. The government will ask these employers to make a 10% contribution to the cost, paid directly to the provider, and the government covers the rest. This cost will be spread over the lifetime of the apprenticeship. The government is offering additional support to organisations with fewer than 50 employees by paying 100% of training and assessment costs for their apprentices aged 16-18 and for those aged 19-24 formerly in care or with a local authority education, health and care plan.


Additional payments and funding which may be available

  • Employers are not required to pay National Insurance Contributions for apprentices under the age of 25 on earnings below the higher tax rate of £827 a week (£43,000 a year).
  • £1,000 payment to both the employer and provider when they train a 16 to 18-year-old.
  • £1,000 payment to both the employer and provider when they train a 19 to 24-year-old who has previously been in care or who has a local authority education, health and care plan.

The new apprenticeship standards

The new standards put employers in control of designing apprenticeships, so people are equipped with the skills that meet the needs of their organisation. The reforms are:

  • replacing the existing complex frameworks with short, simple, accessible apprenticeship standards describing the skills and knowledge that an individual needs to be fully competent in an occupation; and written by employers in a language they understand
  • improving the quality of apprenticeships through higher expectations of English and maths, more rigorous testing to ensure the apprentice is fully competent and raising aspirations for apprentices by introducing grading at the end of the apprenticeship
  • giving employers control of the funding so that they become more demanding customers

Over 200 Trailblazers involving more than 1400 employers with 260 standards have already been published (of which over 70 are higher and Degree Apprenticeships) and more than 180 new standards are in development.

The new apprenticeships are in a broad range of sectors from nuclear to fashion, law, banking and defence. There have been 4,200 starts on new standards in occupations such as Software Developer and Aerospace Engineer. The first apprenticeship starts on the new standards began in September 2014.

Guidance for employers on the standards development process as well as a list of approved standards and those in development are available at GOV.UK, search ‘apprenticeship standards’.


For a FREE consultation on the levy fund and other funds you may be able to access, complete the contact form and a member of our team will be in touch. 

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