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I want to know about the apprenticeship levy

What is the apprenticeship levy?

Employers with a paybill of at least £3 million are required to pay the apprenticeship levy. This levy is a compulsory payment set by government to pay for training of apprentices, and is calculated at 0.5% of the organisation’s paybill.  

The apprenticeship levy is payable UK-wide – although Scotland, Wales and Northern Ireland have their own approaches to apprenticeship development and delivery. 

The Skills Funding Agency has a useful estimating´╗┐ tool  which helps employers to assess whether they are eligible to pay the appre´╗┐nticeship levy and, if so, how much they will pay.

Eligible companies (i.e. those with a paybill of at least £3 million) must register as a levy-paying employer. Find out more about how to pay the levy and how to report your payments here. Companies set up during the fiscal year can register for an account at any time.

The apprenticeship levy could generate around £20 million a year from the largest 170 or so screen industry employers. (Source: PACT, Creative Skillset Employment Survey 2015, O&O analysis – with ‘screen industries’ defined as TV (broadcast and production), Film, Post-production/VFX, Games and Animation).  

Why is there an apprenticeship levy?

The government wants to help improve productivity and employability by instigating new employer-led apprenticeships. It has committed to an additional three million apprenticeship starts in England by 2020. The levy is to help deliver new apprenticeships and support quality training by putting employers at the centre of the system. 

The apprenticeship levy will fund the training to support apprenticeships, with funds accessed through online accounts and digital training vouchers. 

What are digital training vouchers?

Levy-paying employers will be allocated digital vouchers to fund apprenticeship training.  The digital vouchers cannot be used for wages, standards development, training materials or course content as employers are expected to cover these costs.  

How do I register for the levy/claim my digital training vouchers?

The Apprenticeship Service provides an online service to support the apprenticeship levy and help employers manage their digital voucher accounts. Once your account has been created you will be able to manage your apprenticeship funds. The Skills Funding Agency has a useful estimating tool which allows employers to determine if they will pay the apprenticeship levy, how much they will have available to spend on apprenticeships and how much the government will contribute towards the cost of training.

Digital training vouchers are  valid for 24 months. As apprenticeships operates differently across the UK, employers with operations outside England should check the relevant details for ScotlandWales or Northern Ireland

From 2018, an employer can choose to transfer up to 10% of their vouchers to either another organisation (for instance a supplier or partner) or to an Apprenticeship Training Agency.

Do I get help with hiring an apprentice if my organisation pays the levy?

The Skills Funding Agency has a useful estimating tool to help employers assess how much they will have to invest in apprentice training and how much the government will contribute towards the cost of training.

Can I get help with hiring an apprentice if my organisation doesn’t pay the levy? 

Employers with paybills of under £3 million are entitled to have 90% of their apprenticeship training costs paid. Employers with fewer than 50 employees can have 100% of their training costs paid if the apprentice is aged 16-18 or is a care leaver aged 19-24. They are also entitled to have all of their training costs paid if their apprentice is 19-24 years old with a local authority education and healthcare plan. Employers and training providers each receive an additional £1,000 if they’re supporting younger apprentices with additional learning needs.

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