Apprenticeship Levy FAQs

If you’re feeling in the dark about the forthcoming Apprenticeship Levy, take a look at our answers to some of the most frequently asked questions about changes to apprenticeships below.

If we've not answered your question, or you'd like further information, don't hesitate to get in touch with our Levy team directly. 

The Apprenticeship Levy FAQs

What is the Apprenticeship Levy?

Will the Apprenticeship Levy affect me?

What will the Apprenticeship Levy cost me?

Is the Apprenticeship Levy just another tax I’ll have to pay?

How do I recoup the money I pay into the Apprenticeship Levy?

How will the Apprenticeship Levy work?

What if I don’t want to pay the Apprenticeship Levy?

What can I use my Apprenticeship Levy funds for?

Can I use Levy funds for training that isn’t apprenticeship-based?

How many apprentices will my Levy payment get me?

Can my organisation engage with the Apprenticeship Levy if we’re based in Scotland, Wales or Northern Ireland?

How are Apprenticeships changing?

Will more information on the Levy be forthcoming from the government?

How will funding for young apprentices change?

Can I take on apprentices before the Levy changes come into effect?

How do I find an approved training provider?

Will the Apprentice Levy affect public sector organisations like schools?

How do I get the most out of my Levy funds?

Do I need to do anything about the Apprenticeship Levy right now? 

Are employers allowed to create agreements with apprentices which allow them to claim back co-investment funds when apprentices leave early? 

My business has added their learner details through on the Apprenticeship Service. What happens next and how long will this take? 

An employee did a business administration apprenticeship level 3 several years ago. Can they do a new business administration level 3 standard as a refresher course? 

What is the Apprenticeship Levy?

The Apprenticeship Levy was first announced by the government in the 2015 Summer Budget. It seeks to bolster the UK’s productivity by creating and funding three million apprenticeship starts by 2020 and will come into force from April 2017.

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Will the Apprenticeship Levy affect me?

UK-based employers who pay their employees more than £3 million each year will be required to pay in 0.5% of their total pay bill into the Levy, although it’s expected that 98% of organisations in the UK won’t have to pay anything. 

You can use our Apprenticeship Levy Calculator to find out how much the Levy is likely to cost your organisation and if you don't meet the threshold, take a look at our guide on how smaller employers can make use of Levy funding.

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What will the Apprenticeship Levy cost me?

If you qualify for the Levy, you’ll need to pay in 0.5% of your annual pay bill to the fund via HMRC’s PAYE (Pay As You Earn) scheme. However, qualifying organisations will also be subject to a £15,000 allowance that can be offset against their payments.

Connected companies and group organisations that, separately, may not meet the qualifying criteria may still have to pay if their group’s total annual payroll surpasses the £3 million mark.

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Is the Apprenticeship Levy just another tax I’ll have to pay?

While the Apprenticeship Levy will cost qualifying organisations money, they’ll be able to recoup this - plus a 10% top-up from the government by investing in training and developing their workforce.

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How do I recoup the money I pay into the Apprenticeship Levy?

The funds you pay into the Levy, plus the government’s 10% top-up, will be added to your Apprenticeship Service Account, which can be used to take on new apprentices, or pay for training for existing staff.

If you’re interested in getting back the money you’ll pay in - and more - book an obligation free chat with our dedicated Levy team today for tailored advice on the best way forward.

Talk to our levy team

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How will the Apprenticeship Levy work?

Since the process of paying and recouping the Apprenticeship Levy can be somewhat complex, we’ve set out each party’s roles in our handy infographic. However, in brief:

From April 2017, you’ll need to calculate your Levy contributions based on your payroll for the year ahead and report these to HMRC. From there, the government will verify you’ve paid and pass the information on to the Department for Business Innovation and Skills.

The funds you’ve paid in will then enter your Apprenticeship Service Account and the government will apply a 10% top-up. You can then begin the process of commissioning a training provider and procuring apprenticeships, or training.

Providers are paid directly by the government after it’s verified that your training has been completed and if you don’t use the funds in your Apprenticeship Service Account, they’ll expire after 24 months.

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What if I don’t want to pay the Apprenticeship Levy?

Unfortunately, if your organisation falls within the scope of the Levy, you don’t have a choice. HMRC will have the power to assess companies and if deemed necessary, impose penalties for non-compliance.

Employers can be penalised for a wide range of Levy-related issues, including:

  • Failing to keep up-to-date and appropriate records
  • Errors on Levy-related returns
  • Failure to provide these returns
  • Late payments.

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What can I use my Apprenticeship Levy funds for?

While the term ‘Apprenticeships’ may put you in mind of taking on a very young person in an entry-level role, your Levy funds can also be used to upskill your existing staff in a variety of ways.

Existing apprenticeship frameworks are in the process of being replaced with a new set of ‘Trailblazer’ standards that are designed to more accurately reflect employer’s priorities in terms of workforce development.

Since there’s so many available, it wouldn’t be practical to cover them all here. But if you’re interested in learning more about how sourcing appropriate training that’ll help you meet your business goals, simply get in touch and we’d be more than happy to discuss your needs:

Talk to our levy team

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Can I use Levy funds for training that isn’t apprenticeship-based?

Unfortunately not. But, as mentioned, a wave of new Apprenticeships are being introduced to cover a broad scope of training - including disciplines like marketing, HR and management.

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How many apprentices will my Levy payment get me?

This will be largely dependent on the amount you’ll pay into the Levy and the type of training you’re looking to procure.

As of April 2017, both new Apprenticeship standards and existing frameworks will be split into 15 funding bands - each of which will have an upper limit on training costs (these will range from £1,500 to £27,000).

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Can my organisation engage with the Apprenticeship Levy if we’re based in Scotland, Wales or Northern Ireland?

Since the Levy falls within the scope of tax policy, which applies UK-wide, organisations throughout the country will have to pay into it.

However, since skills and training is a devolved policy, how Scotland, Wales and Northern Ireland will use the funding is entirely up to their individual governments.

As of now, there’s no concrete plans in place as to how they plan to use the Levy funding they’ll gain, but each nation has held separate consultations and are in the process of formulating their response. For further information, take a look at our in-depth guide on the issue.

For organisations whose workforce is split among various nations within the UK, while they’ll have to pay the Levy based on the payroll of their entire workforce, they’ll only be able to access funding (and the government’s 10% top up) on the amount that applies to their workforce within England.

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How are Apprenticeships changing?

The current system of SASE (Specification of Apprenticeship Standards for England) frameworks is in the process of being replaced with a slew of new Apprenticeship standards that the government is working with employers across various sections to create.

These 'Trailblazer' standards aim to better cater for the needs of employers and each will include an end-point assessment to make sure the trainee is up to specification. The government aims to have replaced all existing frameworks by 2020 and you can take a look at our guide on the issue for further information.

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Will more information on the Levy be forthcoming from the government?

There’s still a lot of information that’s yet to be released about the future of the Apprenticeship Levy, but we’ll be monitoring it closely and make sure you’re kept up to date.

For more detailed information on the topics discussed here, be sure to take a look at our Apprenticeship Levy blog.

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How will funding for young apprentices change?

Under the current system of apprenticeship funding, employers taking on 16 to 18-year-olds are eligible to have the government pay for the entire course. This is reduced to half for 19 to 23-year-olds and to criteria-based contributions for those over the age of 24.

The launch of the Levy will see this tiered system replaced with various incentives for taking on young apprentices, while companies with fewer than 50 employees will forgo paying any costs when taking on 16 to 18-year-olds.

For more details, take a look at our guide on funding changes for young apprentices.

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Can I take on apprentices before the Levy changes come into effect?

Yes - any apprentices you take on prior to the changes coming into force in April 2017 will be funded via the current system for the duration of their apprenticeship.

You can find out more on how the Levy changes will affect existing apprenticeship programmes in our handy guide.

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How do I find an approved training provider?

From February 2017, both Levy-paying employers and smaller organisations will gain access to the government’s Find My Apprenticeship Provider portal. This will contain a full directory of approved providers, which will be regularly updated as more come on board.

You can find out more about appointing an approved provider in our guide, or get in touch directly.

Talk to our levy team

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Will the Apprentice Levy affect public sector organisations like schools?

All public sector employers that meet the necessary criteria will fall under the scope of the Levy, with a few exceptions. 

This is likely to affect multi-academy trusts, large stand-alone schools and maintained schools, whose designated employer is the local authority. 

Public sector organisations also have to comply with the government’s public sector apprenticeship targets, which will require them to employ the equivalent of 2.3 per cent of their workforce as apprentices per annum. 

You can find out more about the Levy’s impact on schools in our guide. 

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How do I get the most out of my Levy funds?

There’s a number of factors that could influence how best to deploy your Levy funds, including your workforce development needs, location and size. 

For more details, take a look at our guide.

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Are employers allowed to create agreements with apprentices which allow them to claim back co-investment funds when apprentices leave early?

No. This is a funding rule and apprentices cannot be asked to contribute financially to the cost of an apprenticeship. 

54.4. not be asked to contribute financially to the direct cost of learning or assessment (this includes where an apprentice leaves their programme early; employers must not claim training or assessment costs back from ex-apprentices.)

You can find out more about this in our guide

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My business has added their learner details through on the Apprenticeship Service. What happens next and how long will this take?

Employers can either send through some basic learner details or a blank cohort to a training provider to start the process of confirming a learner for funding through the Apprenticeship Service. The training provider then needs to add some details including the ULN that then needs to be confirmed by the employer. An email will be sent to them by the Apprenticeship Service telling them when they need to so this.

In order for the training provider to be able that the apprentice is confirmed for funding they will also need:

  • A completed Individual Learner Record (ILR)
  • A contract agreement between the employer and the training provider which details the agreed price.

If all of this is completed by the 4th working day after month-end, then payments should start to be made from the employer’s apprenticeship service account to the training provider. 

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An employee did a business administration apprenticeship level 3 several years ago. Can they do a new business administration level 3 standard as a refresher course?

No. Although though there are new flexibilities around prior attainment so that level 4-plus learners can now do an apprenticeship at a same or lower level if it is materially different.

Do I need to do anything about the Apprenticeship Levy right now?

It’s important to have a plan in place to make sure you can take advantage of the Levy when it comes into force in April and recoup the money you’ll pay in.

If you’re interested in finding out more, get in touch with our dedicated Levy team for bespoke advice on how best to engage with the initiative and procure training that complements your business goals.

Talk to our levy team

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