Introduced on 6th April 2018, the Apprenticeship Levy requires employers, with a pay bill of over £3 million each year, to pay a levy of 0.5% of the total pay bill. Due to its high pay bill threshold, only an estimated 2% of businesses will be required to pay the levy; however, the overall impact should, according to government documents, be felt by businesses across the UK no matter their size.
Why was the levy introduced?
The Levy was originally announced in 2015’s summer budget, it’s purpose is to boost productivity throughout UK businesses by investing in ‘human capital’. One of the main ways the government plans to do this is to ensure that the quality and quantity of apprenticeships increases substantially, with a goal of an additional 3 million apprentice starts within England by 2020.
Employers paying the levy
Levy paying employers have access to an online apprenticeship service which will allow them to retrieve levy funds to subsequently spend on apprenticeships, manage existing apprentices, as well as pay or amend payments to a training provider.
Funds can only be used on apprentices that work at least 50% of the time in England and can only go towards training and assessment. Other costs associated with employing an apprentice (i.e. wages, travel costs, etc) are not included within levy funds.
Employers not paying the levy
For those employers not paying the apprenticeship levy, they will share the cost of the training and assessment of their apprentices with the government. Otherwise known as ‘co-investment’, employers are required to pay 10% towards the cost of training, with the government paying the remaining 90% (up to a funding maximum).
The online apprenticeship service is not currently available to non-levy paying employers, but access to this service is expected in the not too distant future. Employers paying the levy but not taking advantage of its benefits, can now choose to share funds with a non-levy paying employer.
Here at Avidity, we are helping both levy paying and non-paying employers across the UK, to ensure their apprentices receive the highest quality training. Find out more about how our services help businesses to maximise upon the opportunities the levy presents on our employers page.
For more information on the Apprenticeship Levy take a look through government guidance.