Apprenticeship levy

balance sheet

The way the government funds apprenticeships in England changed on 6 April 2017. Large employers are now required to pay an apprenticeship levy, and funds to pay for apprenticeship training is accessed through an online account system.

One of the key changes is that training providers will no longer receive funding direct from government, instead employers will negotiate contracts with providers for the delivery the apprenticeship training and assessments they need, giving them more control in the process.

This page summarises the key points of the levy for NHS organisations and links to further guidance and useful resources.

The levy - key points for employers

  • The levy is payable by employers at 0.5 per cent of their pay bill (see below for details of how to calculate and pay the levy).
  • All employers receive an allowance of £15,000 to offset against the levy, which means the levy is only payable on a pay bill in excess of £3 million in each year.
  • Employers create an online account with the Apprenticeship Service and levy funds are paid into this.
  • Funding is credited to the online account on a monthly basis, with a 10 per cent top-up applied at the same time. 
  • Employers with a pay bill of less than £3 million won’t pay anything but will share the cost of training and assessing their apprentices with government through a ‘co-investment’ arrangement. For more details on this, visit: guidance for non-levy paying employers.
NHS Employers has developed a guide Changes to apprenticeships: what employers need to know that offers advice, hints and tips on the changes to apprenticeship policy.
 

Factsheet

We have produced a factsheet for employers that helps to explain how the apprenticeship levy will work in practice and sets out:

  • who will be affected
  • how much they will have to pay
  • how employers can access funds to pay for training and assessments. 

Download the factsheet. 

Engaging board members

NHS Employers has produced a briefing which can be used to raise awareness of apprenticeships policy changes with board members. The briefing contains a set of key questions for your board to consider and suggests actions organisations may wish to take to obtain the maximum benefit from the levy. 

Download the board briefing.

Paying and using the levy

The government has introduced the levy to fund investment in apprenticeships on a long-term, sustainable footing. It will be collected through the Pay As You Earn (PAYE) system and HM Revenue and Customs (HMRC) will work closely with employers to minimise the impact of implementing these changes. 

The levy will be payable by employers at a rate of 0.5 per cent of their pay bill in excess of £3 million. The pay bill will be calculated on total employee earnings subject to class one secondary national insurance contributions (NICs). 

HMRC have published guidance for employers that details how to calculate, pay and report against the apprenticeship levy.  

Employers create an online account with the Apprenticeship Service and levy funds are paid into this on a monthly basis, with a 10 per cent top-up applied at the same time. Employers use the funds in their digital account to pay for apprenticeship training and assessments. The levy fund cannot be used to cover the cost of an apprentice's salary. 

The service account will enable employers to:

  • manage their levy funds by viewing payments into, and out of the account
  • view their balance, forecast and plan their spending
  • select the apprenticeship training they require
  • find a training provider or providers to deliver the training and set up payments
  • post apprenticeship vacancies.

Any funds that are not used will expire 24 months after they enter the account, unless they are spent on apprenticeship training. The account will work on a first-in, first-out basis, with payments made from the funds that entered the account first used to help minimise the amounts that expire. 

The funding rules for 2017 to 2018, which form part of the terms and conditions for how funds in an employer’s account can be used are available to download

For more details about the financial arrangements, and the additional support available, go to our Apprenticeship funding pages.

We have a separate Q&A webpage that responds to a range of questions raised by employers about apprenticeships and the apprenticeship levy.

Additional financial support

Along with the 10 per cent top-up applied to the levy funds additional financial support is also available for employers and training providers which will come directly from the government. 

Additional payments will be offered to both employers and training providers to help with the costs associated with supporting younger apprentices (those aged 16-18 years), care leavers and those with education, health and care plans or legacy statements. Access to Work is also available to support disabled apprentices and those with long-term health conditions. You can read more about Access to Work on the government's website.

Training providers will also receive additional funding where apprentices need help to gain the minimum standard of Level 2 in English and maths, or where they require additional learning support as a result of conditions such as dyslexia, learning difficulties or disabilities. 

Further details about the financial arrangements, how the funds can be used and the additional support available, can be found on our Apprenticeship funding page.

Further guidance on the levy arrangements are available on the Gov.uk website 

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