13 July 2023

What is The Apprenticeship Levy? Everything You Need to Know

Career Advice Industry News Recruitment Advice

The Apprenticeship Levy was first introduced in April 2017 in a bid to help the UK Government to meet its target of 3 million apprentices by 2020 and to encourage employers to see the value in apprenticeships.

Levy funding can only be used to facilitate high-quality apprenticeships that are designed to help young people to achieve their aspirations and get on the right track to a rewarding career. Apprenticeships should also allow apprentices to reach their long-term goals, through the right level of support and education.

If you’re looking for more information about the Apprenticeship Levy, you’ve certainly landed in the right place. We have created a helpful guide outlining everything you need to know, including understanding how the Apprenticeship Levy can benefit your business and whether or not you are eligible to be part of the scheme.

What is the Apprenticeship Levy?

The government Apprenticeship Levy is a form of taxation that has been designed to help businesses invest more in apprenticeships, in a bid to boost employment, training, and development opportunities.

But how does it work?

The Apprenticeship Levy is a tax paid by employers, which is then stored in a fund so that it can be accessed to help pay for the costs that come hand in hand with apprenticeship training.

Paid monthly through PAYE alongside income tax and national insurance contributions, all employers that use the levy must declare it each month, from the beginning of the financial year.

Businesses with a payroll of £3 million or more are eligible to be part of the levy and they must make monthly deposits of 0.5% of their annual pay bill into the Apprenticeship Levy pot.

This initiative benefits companies operating across a diverse range of sectors, helping businesses to optimise employee engagement through teaching apprentices core skills that will facilitate a prosperous career, in a variety of industries.

Apprenticeship Levy

When Was the Apprenticeship Levy Start Date?

The Apprenticeship Levy was first introduced on the 6th of April 2017, and since then it has been used by thousands of businesses throughout the UK.

Who Can Use the Apprenticeship Levy?

In order to use the Apprenticeship Levy, you must have a payroll of more than £3 million. Levy funds can only be used to pay for apprentices to achieve the qualifications that are outlined in their approved apprenticeship training.

Also explore why you should choose an apprenticeship with us.

What is a Levy Transfer?

Large employers that pay the Apprenticeship Levy can choose to transfer up to 25% of their levy funds each year to other businesses. This will help the other businesses to pay for their apprenticeship training and assessment and is a way of supporting other businesses.

Any business can receive a transfer of levy funds, including both businesses that pay the Apprenticeship Levy themselves, as well as those that don’t. Transferred funds can only be used to pay for apprenticeship training and assessment up to the funding band maximum and can only be used for a new apprentice start. This doesn’t mean that the apprentice has to be a new employee, but they must not have already started their apprenticeship.

Businesses transferring levy funds must keep in mind that the transfer is not a one-off payment – when you agree to transfer funds, you are committing to pay for a specific apprenticeship over the course of its duration.

Apprenticeship Funding for Employers

The Government is keen to place apprenticeship funding in the hands of employers in order to encourage them to invest in and create apprenticeships, across a diverse range of sectors.

Full details of the Government funds available to employers, including details of funding bands and the Apprenticeship Levy, can be found here. Remember, the amount of funding you could be entitled to depends on whether you pay the Apprenticeship Levy or not.

Also, find out the national apprenticeship week 2023.

Apprenticeship Levy Funding Rules & Regulations

The rules all employers and training providers must follow to secure funding for training and assessing Apprenticeships in the UK are as follows:

  • Apprentices will no longer be required to attempt level 2 English and Maths tests to complete a level 2 apprenticeship.
  • There are now new rules regarding training plans, costs and employment arrangements that you must be aware of.
  • You must now familiarise yourself with Flexi-job apprenticeships

Full details of the changes can be found using the GOV.uk website.

Why Choose Us?

Here at ARM, we are dedicated to providing you with the talent you need to succeed with our market-leading recruitment solutions. Armed with over 25 years of success in recruiting across some of the most demanding and competitive sectors in the world, we are the ideal recruitment partner for your business needs.

Explore our broad range of jobs we have available.

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