Levy & Non Levy
Starting in April 2017 and continuing to develop until 2020, the Government is reforming the way Apprenticeship training is handled.
Colleges, Training Providers and Awarding Bodies will no longer have control over Apprenticeship funding, instead control will be in the hands of the Employers. The initial focus will be on the introduction of an Apprenticeship Training Levy for employers with a salary bill of over £3m.
This webpage will focus on how the upcoming reform will affect the funding that employers receive and how it will work.
Some of the information may change over time as more detail becomes available and as the new delivery and funding rules are released. As such, we will be providing regular updates and will also be announcing some changes to the way in which we operate in order to provide the best possible support and training delivery for employers of all sizes.
So, for more information on how the Apprenticeship Reform and Levy will affect your business, and to see how Kiwi can assist, contact our team of Business Development Manager on 023 8017 0380
Apprenticeship Levy Paying Companies
From April 2017, employers with a total pay bill of over £3m will automatically pay a 0.5% ‘levy’ to fund their Apprenticeship training.
The first time eligible employers will have to declare their liability to HMRC will be in May 2017 for levy due on their April payroll and will see funds in their account from 22nd May. This contribution will be offset by a £15,000 allowance.
The levy will be collected by HMRC each month, directly via PAYE processes.
No employer, whether they train apprentices or not, is exempt from the levy. This includes charities, public sector organisations, local authorities and the education sector.
Employers who already pay into a levy system, such as CITB, will not be exempt.
How will the Levy work in reality?
Below is an example of how a company whose wage bill of £6m, will contribute towards the levy.
0.5% levy sum x £6m wage bill = £30,000 levy £30,000 levy – £15,000 allowance = £15,000 payment
Employers in England who pay the levy and are committed to apprenticeship training will also receive a 10% top-up, directly into their DAS account. That means for every £1 that enters an employer’s digital account, they will actually receive £1.10.
What happens to an employer’s levy contributions?
It has been suggested that 100% of the value of the monthly levy deduction will go into an employer’s DAS account. Employers should see funds appear in their digital account monthly, a few working days after confirming their pay bill and levy contribution to HRMC for the previous month.
Applying this same wage bill to a monthly scenario can be seen below:
0.5% levy sum x £500,000 monthly wage bill = £2,500 levy
£2,500 levy – £1,250 allowance = £1,250 payment
£1,250 payment + £125 Government Top-up = £1,375 DAS Spend
This example is for a company with 100% of its employees living in England. Further regulations apply for companies whose employees live in Scotland, Wales or Northern Ireland
How is a price for training agreed?
Employers will agree a price and payment schedule for an Apprenticeship or Standard directly with the training provider. The Apprenticeship’s co-investment limit will depend on what Funding Band the Standard or Framework falls into. If the agreed price is higher than the Band Upper Limit, the employer will have to pay this themselves.
Here are two examples:
BELOW UPPER BAND LIMIT
The employer agrees a price of £2,250 for an Apprenticeship that falls into Funding Band 3 The Government pays £2,025 and the employer pays £225
ABOVE UPPER BAND LIMIT
The employer agrees a price of £3,250 for an Apprenticeship that falls into Funding Band 3. The Government pays £2,250 and the employer pays £1,000
ARE THERE ANY EXTRA INCENTIVES
Employers who take on a 16-18 year old will receive an additional £1,000 payment, received in two equal instalments on 3 months and 12 months. This will be sent from your training provider.
For businesses with less than 50 employees, it is proposed that the Government will pay 100% of the training costs for Apprentices aged 16-18.