How its Funded

Apprenticeships are funded in 2 ways “LEVY” and “NON LEVY”.

UK employers with a pay bill of £3million or more will pay an apprenticeship levy. They can access this money through the Apprenticeship Service and it can only be used for apprenticeship training and development in their own organisation. If they don’t use the levy funds within two years then it goes back to the Government. If they use all their levy and want to train more apprentices, they’ll pay for them using the same model as an SME. The levy is collected by HMRC via the PAYE process. There is a £15,000 allowance and the Government will top-up monthly funds for apprenticeship training by 10%. No employer is exempt.

For example:

Employer with a pay bill of £50,000,000

Levy sum: 0.5% x £50,000,000 = £250,000

Allowance: £250,000 – £15,000 = £235,000

After 10% top-up = £235,000 + £23,500 = £270,500 levy funds available to spend

 

Employers control where they spend their apprenticeship funding. The providers will get that money through their monthly Individualised Learner Record (ILR) return.

Non-levy paying (micro-businesses and SMEs)

SMEs with a pay bill under £3million contribute 10% of the total apprenticeship cost and the Government pays the remaining 90%. The same model is used for levy-paying employers who have exhausted their funds.

 

The Government will fund 100% of the cost of apprenticeship training for a 16-18 year old for businesses with fewer than 50 employees.

Funding an apprenticeship for non levy employers

As an employer that doesn’t pay the apprenticeship levy, you pay just 5% towards the cost of training and assessing an apprentice.

The government will pay the rest up to the funding band maximum.

You’ll pay the training provider directly and agree on a payment schedule.

If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged:

  • 16 to 18
  • 19 to 24 with an education, health and care plan provided by their local authority or has been in the care of their local authority

If you exceed the funding band maximum, you’ll need to pay all the additional costs.

If your apprentice started before 1 April 2019, you pay 10% towards the cost of training and assessing your apprentice and the government pays the rest. This rate continues until your apprentice completes their training.

You will need to create an apprenticeship service account to reserve apprenticeship funding. For further information visit our help article or watch our video.

Funding an apprenticeship for levy payers

As an employer with a pay bill of more than £3 million, you’re required to pay the apprenticeship levy. You can manage funds using the apprenticeship service and spend it on training and assessing your apprentices.

The government will apply a 10% top up to the funds you have in your account.

If you don’t have enough funds, you just pay 5% of the outstanding balance and the government will pay the rest. This is up to the funding band maximum allocated to each specific apprenticeship.

For apprentices that started before 1 April 2019, you need to contribute 10%.

If you exceed the funding band maximum, you’ll need to pay all the additional costs.

If you don’t already have an account, find out how to set up an apprenticeship service account as an employer.

How we can help.

  • We’ll explain how the new legislation impacts your specific business so you can make informed choices about your workforce development and invest your levy payments wisely.
  • We’ll make the process easy and simple to understand.
  • We’ll recommend training that is right just for you, choosing from a wide selection of options that fit with your organisation’s ethos, challenges and ambitions for the future.
  • We’ll explain how the new legislation impacts your specific business so you can make informed choices about your workforce development and invest your levy payments wisely.
  • We’ll recommend training that is right just for you, choosing from a wide selection of options that fit with your organisations’ ethos, challenges and ambitions for the future.

Why work with us?

  • Our team of friendly and experienced experts offer a personalised service with a dedicated account manager to guide you through from start to finish.
  • For over 10 years we’ve been a trusted training partner of some of the region’s most successful businesses, ensuring value for money and delivering measurable results.