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What is the Apprenticeship Levy

The apprenticeship levy offers long-term sustainable funding for apprenticeships and provides employers more flexibility when delivering training services to their workers.

The levy allows more money accessible for apprenticeship training than ever before. It helps employers choose the apprenticeships they offer, how many they sell, and when they sell them. As a result, by 2019-20, the funds allocated for apprenticeship investment in England will have grown to more than £2.5 billion, more than double the total invested in cash in 2010-11.

Since its introduction, the levy has successfully supported almost 313,000 people starting their apprenticeship courses.

Despite this progress, some citizens are also perplexed about how the levy works. The following are several important facts to be aware of:

Do I have to pay the levy if I own a business?

Employers with a payroll bill costing more than £3 million will be expected to pay the levy (they pay 0.5 per cent of their total annual pay bill). Currently, 2% of companies pay the apprenticeship levy, but this incentive funded almost half of all apprenticeships in 2017/18.

As a levy-paying firm, how do I access my funds?

Employers who incur the levy could use their funds via the online apprenticeship scheme. The funds in their accounts are valid for apprenticeship study in England.

Will my payments just be used for apprenticeships?

The levy is designed to assist all companies in compensating for apprenticeship training. Any levy funds that are not spent are used to support current apprentices in finishing their schooling and to pay smaller companies with apprenticeship training.

Is it just levied on big corporations?

No. The levy assists all companies in covering the costs of apprenticeship preparation. However, smaller businesses with a combined annual salary bill of less than £3 million contribute just 5% of the cost of apprenticeship training, with the government covering the rest.

Why does the government aid levy-paying firms in allocating their funds?

The National Apprenticeship Program supports levy-paying firms utilising their levy funds to help their businesses through face-to-face and telephone assistance.

Employers who incur the tax would now be able to transfer up to 25% of their levy funds to other employers, guaranteeing that the structure is scalable, satisfies workers’ expectations, and supports smaller firms in investing in additional training initiatives.

I am a business owner who is having trouble using my levy funds?

Employers desire and need flexibility. Therefore, the government extended employees’ time to invest their levy funds from 18 to 24 months. In addition, employers who incur the tax could now transfer up to 25% of their levy funds to other employers.

Has the apprenticeship levy tended to raise the number of apprenticeships taken up?

After its introduction on April 6, 2017, the levy has specifically aided 312,900 individuals in starting their apprenticeship course, according to the most current figures.

What happens to unutilised levy funds?

Employers have 24 months from the day they receive their apprenticeship programme account to utilise their assets; otherwise, their funds would expire. The funds would lapse to enable levy payers to participate in high-quality planning and assessment while stopping levy payers from amassing significant balances. Any levy funds that remain unspent at the close of each fiscal year, on the other side, are used to assist existing apprentices in finishing their education, to offer apprenticeship instruction for smaller companies, and provide additional payments to apprentices.

Since I am a levy-paying corporation, would the government use my unspent levy funds on other items?

Employers in England can only use their levy funds for apprenticeship training.

However, it is crucial to notice a difference between employer levy funds and the department’s ring-fenced apprenticeship budget. Both apprentices who are now enrolled in school and those that are only starting are covered by the department’s budget, as are others who work with companies who pay the apprenticeship levy and those who do not.

Businesses of all sizes employ and train more apprentices, and the apprenticeship cost would be significantly underspent (if at all). As a result, levy payers would invest a more significant portion of their donations.

My employee wants a longer-term apprenticeship programme, but my levy funds are expected to expire in 24 months. What am I supposed to do to compensate for this?

The risk that an employer’s funds in their apprenticeship service account will expire after 24 months does not prevent employers from covering the total cost of an apprenticeship that lasts longer than 24 months. This is because additional contributions are deposited into an employer’s account daily as they pay the bill.

Apprenticeship payments are spread out throughout the apprenticeship and billed in monthly instalments. The government often utilises the oldest funds in an account first to minimise the risk of funds expiring.

Only uninvested payments would be lost 24 months after they are transferred into an employer’s account. After that, if an employer’s budget does not have adequate money to cover the monthly payment, the government will pay 90% of the sum due.

Employers will use the National Apprenticeship Service’s ‘Estimate my apprenticeship support’ tool to assess how much money their enterprise will need to invest in apprenticeships.

Though I pay the tax, I find the apprenticeship scheme ineffective and perplexing. How can I contact for help?

Thousands of firms, like top corporations including Channel 4, Royal Mail, and Lloyds Banking Group, as well as public service agencies including the NHS and the British Armed Forces, are currently leveraging levy funds to offer a broad spectrum of high-quality apprenticeship services.

Updated on September 7, 2022

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