The Year of the Levy
In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers. The apprenticeship levy will be introduced on 6 April 2017. The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.
Employers with an annual pay bill of more than £3 million will need to spend 0.5% of their total pay bill on the apprenticeship levy. Government will introduce a ‘levy allowance’ of £15,000 per year. This means that the total amount you need to spend is 0.5% of your pay bill, minus £15,000, you’ll start paying the levy in May 2017. Any apprenticeships started from this date will be funded according to the new rules.
The Government will create a Digital Apprenticeship Service (DAS) through which everything from certification to funding (including levy funding) will be channelled. Funds in your digital account, and funding provided by the government through co-investment, can only be used towards the costs of apprenticeship training and end point assessment. This must be with an approved training provider and assessment organisation. Employers will be able to use funds in their digital account or access government co-investment support to train any eligible individual to undertake an apprenticeship at a higher level than a qualification they already hold, including a previous apprenticeship. It cannot be used on other costs associated with your apprentices or wider training effort. For example wages, statutory licences to practise, travel and subsidiary costs, managerial costs, traineeships, work placement programmes or the costs of setting up an apprenticeship programme
Employers who do not pay the levy, and those who want to invest more in training than they have available in their digital accounts, will benefit from significant government funding to support their commitment to apprenticeships. They will also have to make a financial contribution and we call this ‘co-investment’. You will make a 10% contribution to the cost of this training and government will pay the rest (90%), up to the maximum amount of government funding available for that apprenticeship.
The good news for small businesses is employers with fewer than 50 people working for them will be able to train 16 to 18 year old apprentices without making a contribution towards the costs of training and assessment up to the funding band maximum. Instead the government will pay 100% of the training costs for these individuals.
If you are still feeling confused by the upcoming changes why not contact ITEC Learning Technologies? We have experienced many changes over the 34 years delivering apprenticeships and are more than happy to help. We are currently working with Levy paying employers over Essex to tailor partnerships that suit the needs of the business. We pride ourselves on providing a personal and professional service which is why our employers use us again and again!
Please call 01268 286929 to speak to a member of our dedicated levy team.