What is the Apprenticeship Levy?

The Apprenticeship Levy was introduced by the government in April 2017 designed to fund apprenticeship schemes across the UK. It’s a great initiative that aims to lift employment rates, close the skills gap and give motivated learners the opportunity to build and develop skills whilst building their careers.

In this post, we have explained the Levy answering commonly asked questions around ‘What is the Apprenticeship Levy?’.

What is a Levy payment?

The Levy is a small tax charge paid at a rate of 0.5% of an employer’s annual payroll costs. It’s paid to HMRC, alongside Income Tax and National Insurance, automatically via the PAYE system.

The Levy is reserved for apprenticeship training and businesses have two years to spend it, if you don’t use it you lose it!

Expand And Upskill Your Workforce Using Your Apprenticeship Levy.

Who pays the Apprenticeship Levy?

The Apprenticeship Levy is payable by all companies with an annual pay bill of more than £3 million. If separate companies form a group, then their total payroll is used for the calculation.

Can you claim back the Apprenticeship Levy?

You cannot claim back the Apprenticeship Levy if it is not used for the training of apprentices. Employers have two years to use their funds once they enter their Apprenticeship Service Account and after that time they will expire.

The funds expire to encourage levy-paying employers to invest in high-quality training. Any unspent Levy funds are then used by the government to support existing apprentices to complete their training and pay for apprenticeship training for smaller employers.

Levy Transfer

Levy-paying employers can now transfer up to 25% of their unused levy funds to a business of their choice. By doing this, employers will be supporting other businesses in paying for their apprenticeship training costs as well as helping to close the skills gaps in sectors and locations they want to support - creating more job and career development opportunities across England.

The Apprenticeship Levy is held in your account for the training of apprentices, so why miss out? - If you don’t use it, you lose it!

How do you use an Apprenticeship Levy?

Once a business has started paying into the Apprenticeship Levy, it will get access to the ‘Digital Apprenticeship Service’. This is an online portal where employers manage funds and spend it on training and assessing apprentices.

Employers can also use this account to advertise their apprenticeship vacancies on ‘Find an Apprenticeship’.

Can I use the Apprenticeship Levy for existing staff?

The Apprenticeship Levy is not just for the use of training new employees, businesses can also utilise their funds to train and upskill their current teams.

Employee training is important for staff retention, motivation and job satisfaction. Training existing employees through an apprenticeship will lead to them attaining industry-recognised qualifications, providing valuable skills to your business.

How would it work?

Using the Levy to train existing staff works just like any other apprenticeship. Once enrolled a member of staff would spend 80% of their time working as usual, but 20% of their time would be spent as ‘off-the-job training’ while they learn, study or get hands-on with different activities.

Are there payments for hiring an Apprentice?

Employers could get £1000 for taking on an apprentice who is either:

  • Aged 16 to 18 years old
  • Aged 19 to 25 years old and has an education, health and care plan or has been in the care of their local authority.

The payment can be spent on any costs associated with supporting an apprentice in the workplace. For example, on uniforms, their travel or their salary.

Employers do not need to take any action to gain this payment. As the training provider, we will pay you the first payment of £500 after 90 days of the apprenticeship training start date. The final payment of £500 will then be paid after 365 days of the apprenticeship training start date, as long as the learner is still undertaking the apprenticeship.

More information about the Levy can be found here.

At White Horse Training we take care of every aspect of accountancy apprenticeships, delivering for levy-paying and non-levy paying employers in both industry and practice.

We will guide you through the funding process and minimise disruption for you by providing comprehensive support for you and your learner throughout every stage of the AAT Apprenticeship programme.

Call our team for further information about selecting White Horse as your Training Provider.

Accountancy apprenticeship programmes where you - and your apprentice - are supported every step of the way.

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