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Do you wish to make your organisation more productive, effective and competitive?

Businesses are well aware of the benefits of hiring apprentices. A survey has revealed that apprentices help to generate higher productivity and it is an effective way to develop a motivated, skilled and qualified workforce.

Benefits of apprenticeships for your business

Hiring an apprentice is a productive and effective way for any organisation to grow talent and develop a motivated, skilled and qualified workforce.

86% of employers said apprenticeships developed skills relevant to their organisation and 78% reported improved productivity.

Other benefits that apprenticeships contribute to your organisation include:

  • 90% of apprentices stay on in their place of work after completing an apprenticeship
  • there’s a wide selection of apprenticeships available, covering lots of different job roles
  • you can adapt the training your apprentice receives according to the needs of your organisation
  • an apprenticeship allows you to diversify and freshen up your workforce
  • you can employ an apprentice who’s aged 16 up to any age and from any background
Apprenticeship Levy Quick Guide

What is the Levy?
From the 6th April 2017 all companies in England with a payroll of £3 million or over pay the Apprenticeship Levy, regardless of whether you employ apprentices or not. The Government will add 10% to all of your Levy payments, for every £1 you pay the Government will add 10 pence meaning a total of £1.10 will be added to your account. You have a maximum of 2 years to spend your Levy payments.

What can it be used for?
The Levy is an opportunity to invest in all of your workforce as apprenticeships are open to both new and existing employees, of any age and levels. The Levy can only be spent on apprenticeship training with an approved apprenticeship training provider. BCE are approved as a ‘main provider’ of apprenticeship training.

How much will it cost?
The Levy is set at 0.5% of your payroll over £3 million and will be paid monthly to the HMRC via your normal PAYE payments. For example if your annual payroll was £4,000,000 you only pay the levy on your payroll that is over the £3m threshold, your Levy would be £5500 (0.5% of £1M = £5000 +10% =£5500).

Even if you do not have enough money in your Levy account to fund all of your apprenticeships the Government will co-invest 95% of the outstanding cost (English and Maths functional skills are fully funded by the Government and do not come out of your Levy funds). For Example, if we assume your payroll is £4m you would have a monthly payment of £458.33 (£5500 divided by 12 months = £458.33).

The cost of a L2 or 3 Adult Care Worker Apprenticeship is £3000, so if you had 2 apprentices at £3000 each your Levy would not be sufficient to pay the full cost and would need some co-investment, for example 2 x £3000 Apprenticeships = £6000, minus £5500 (Your Levy) = £500 shortfall, the Government will contribute 95% towards the shortfall leaving you to pay £25+vat.

Even if you do not have any money in your account, the Government would co-invest 95% of the cost, you would only need to pay £150+vat towards each apprenticeship (£3000 – 95% = £150).

What next?
If you are a levy-paying employer, you can now create an account https://www.gov.uk/guidance/manage-apprenticeship-funds on the Digital Apprenticeship Service to:

• add or amend information about apprentices and training
• authorise payment to the training provider
• view payment activity in your account and view your balance
• pause or stop a payment to your training provider

Available Funding

Incentive Payment

Starting 1st August 2020, the government have introduced an incentive payment to help kickstart the nation’s economic recovery and in recognition of the value that apprentices can bring to many businesses across the country.

Employers now get £3,000 from the government when you hire apprentice age 16-18, £2,000 when you hire apprentice age 19-24 and £1,500 for apprentice over 25’s.

This fund is available until 31st January 2021.

Workforce Development Fund

If you are in the Care Sector, we are able to guide you towards the Workforce Development Fund where you can claim money back for each course that is successfully completed. The WDF is money, from the Department of Health and Social Care (DHSC), to help adult social care employers towards the cost of developing their workforce. This investment is designed to ensure workers have the right skills and knowledge to be competent and confident in their roles.

How to reserve fundings?

Before setting up your Apprenticeship Service Account you’ll need:

  • an email address you have access to
  • the Government Gateway login for your organisation (or you can use the accounts office reference number and employer PAYE scheme reference number if your annual pay bill is less than £3 million)
  • authority to add PAYE schemes to the account
  • authority to accept the employer agreement on behalf of your organisation

We’ll ask you to:

  • create an account
  • add a PAYE scheme on behalf of your organisation
  • accept the employer agreement with the ESFA

The reserved funds are available to use from the month of the apprenticeship start date and the following 2 months. The reservation will expire at the end of the 3rd month if you do not use it.

You could be eligible for extra funding depending on both you and your apprentice’s circumstances.

If you are a levy payer

You will need to work with your:

  • payroll department to understand how much apprenticeship levy you are due to pay each month and submit to HMRC through the PAYE process
  • finance department for strategic decisions on how you will spend your levy funds
  • HR or training department to discuss your apprenticeship strategy

The amount of funding entering your account each month is calculated by:

If you are a non-levy payer

Smaller employers, who do not pay the apprenticeship levy share the cost of training and assessing their apprentices with the government. This is called ‘co-investment’.

For new apprenticeships starting on or after 1 April 2019 you pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.

All apprenticeships that started before 1 April 2019 will continue at the previous co-investment rate of 10%.

You can pay the difference from your own budget if the price of training is more than the funding band maximum.

As a smaller employer, you can reserve funds in the ‘finance’ section of your apprenticeship service account. You can also give your training provider permission to reserve them on their behalf.

Discover more.

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