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European Social Fund in England and Gibraltar

New Apprenticeship Standards

How much Apprenticeship Levy will you pay?

The government is reforming the way Apprenticeship Training is handled moving all emphasis from Training Providers, Colleges and Awarding Bodies and placing control of the process into the hands of the employers.

The government are introducing an employment Levy of 0.5% based on an employer’s wage bill, if over £3m, to fund Apprenticeship Training from April 2017
The Government will top up levy by 10% each month
Unspent money will lapse after 18 months
Employers design Apprenticeship Standards replacing current frameworks
Creation of an Institute of Apprenticeships to oversee the regulation, design and delivery of apprenticeships overseen by a board made up primarily of employers
A Creation of a Digital Apprenticeship Service (DAS) for employers to simplify the process of finding apprentices and training providers

What is  happening to Government Training Funding:

In the November 2016 the Government released their plan for the delivery of 3 million apprenticeships by 2020.

The main reason for thIS reform is a massive skills gap across the U.K. and the questionable quality of the apprenticeship training compared to other economies around the EU and developed economies around the world has spurred the government into action identified in the ‘Richard Review’ in 2012. This review demonstrated the need to improve the training of young people to ensure that they have the skills and knowledge needed for jobs in the UK.

The main objective of the reforms is to increase employer responsibility for their apprenticeship programme this will lead to having a larger number of apprentices ensuring their training is of the highest quality. As they the employer will receive and be responsible for the funding for the apprenticeship programme.

If you are a large employer you will need to plan how you will use the levy..............Remember your levy payments will start in May 2017. There is no alternative.

How does that affect you and why should you take notice?  Telephone: 01482 845358 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Starting April 2017 the apprenticeship levy will be introduced. This will be 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:

Examples:
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. 
Apprenticeships have been split in to funding “bands” which determine their funding value:
Number Band Upper Limit Number Band Upper Limit
1 £1,500
2 £2,000 
3 £2,500 
4 £3,000 
5 £3,500 
6 £4,000 
7 £5,000 
8 £6,000
9 £9,000
10 £12,000
11 £15,000
12 £18,000
13 £21,000
14 £24,000
15 £27,000

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 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 funded to a higher level than the current equivalent Framework.

Other key changes to the current system include:

  • You are able to enrol staff on to an Apprenticeship programme on an apprenticeship programme lower than their prior attainment as long as they are acquiring significant new skills. e.g. A learner has a prior qualification at level 4 and the learner is now in a different job with an apprenticeship at level 3 (advanced) available. This could mean you enrol a graduate to your apprenticeship scheme so long as they are entering a new role.
  • All employers regardless of size will need to enter in to a financial arrangement with your chosen provider (Intrinsic Training Solutions)
  • 20% of the training value will be held back until the learner achieves or completes. (Subject to an end point assessment for Apprenticeship Standards

Are You aware of what you need to be considering?

Under 50 employees & Salary under £3,000,000

You will not have to pay a compulsory apprentice levy but will still benefit from the changes-

  • You will receive a £1000 incentive for employing an apprentice aged 16-18 years old. This will be paid in 2 parts after months 3 and 12 of the apprenticeship.
  • If you employ an apprentice aged 16-18 the government will fund all of their training costs.
  • You will receive government “co-invest”. For every £1 you contribute the government will contribute £9 for any learner 19+
  • Employer contributions will be made directly to the Training Provider (ICON) for the first year.
  • Small Employers (under 50 employee’s) who employ a 16-18 year-old apprentice will not have to make any contribution to these learner’s apprenticeship training costs.
  • Where eligible you can apply for an AGE grant (£1500 per learner) to spend on supporting a new apprentice up until 31st July 2017 at which point the scheme will be reviewed.
  • You will not need to pay Employer National Insurance contributions for any Apprentice staff aged under 25 (Approx. £2,066 for an employee on NLW for 40 hours per week).
  • You will not need to contribute towards maths, English or Additional Learning Support, this will be funded separately by the government.
  • Over 50 employees & Salary under £3,000,000?
  • You will not have to pay a compulsory apprentice levy but will still benefit from the changes-
  • You will receive a £1000 incentive for employing an apprentice aged 16-18 years old. This will be paid in 2 parts after months 3 and 12 of the apprenticeship.
  • You will receive government “co-invest”. For every £1 you contribute the government will contribute £9
  • Employer contributions will be made directly to your chosen Training Provider (Intrinsic Training Solutions) for the first year.
  • You will not need to pay Employer National Insurance contributions for any Apprentice staff aged under 25 (Approx. £2,066 for an employee on NLW for 40 hours per week).
  • You will not need to contribute towards maths, English or Additional Learning Support, this will be funded separately by the government.

Salary bill over £3,000,000?

You will pay the levy to HMRC via your PAYE system but should still recover more than you put in:

  • You will pay a levy of 0.5% of your total salary (less £15,000) this is only redeemable against Apprenticeship Training
  • Your first payment will be for April 2017 payroll and you will have visibility of this on DAS from May 2017.
  • You will be able to manage your Levy account via DAS
  • You will receive a 10% top up on your levy. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10.
  • You will receive a £1000 incentive for employing an apprentice aged 16-18 years old. This will be paid in 2 parts after months 3 and 12 of the apprenticeship.
  • You will need to register and create your Digital Apprenticeship Service account from January 2017. Once created you will need to verify your PAYE schemes and link them to your account.
  • Once all your levy is spent you will be able to enter the “co-invest” system. For every £1 you contribute the government will contribute £9.
  • You will not need to pay Employer National Insurance contributions for any Apprentice staff aged under 25 (Approx. £2,066 for an employee on NLW for 40 hours per week).
  • You will not need to contribute towards maths, English or Additional Learning Support, this will be funded separately by the government.
    To calculate your levy and how your organisation might benefit fill out the contact form on this page , call 01482 845358 or email This email address is being protected from spambots. You need JavaScript enabled to view it..