Apprenticeship funding

Since April 2017 a new funding model has been in place for apprenticeships. How an apprenticeship is funded is now based on the employer. 

Employers fall into two main groups:

  • Those with an annual payroll over £3 million
  • Those with an annual payroll under £3 million
Payroll over £3m – Levy Paying EmployerPayroll under £3m – Co-Investor Employer

0.5% of payroll is paid by way of a tax to HMRC, with a £15,000 allowance

Payroll is not high enough to pay the levy

The government will top up an employer’s account by 10% each month

 

The government will fund the cost of the apprenticeship at the following levels:

    • 100% of cost if the apprentice is aged 16-18
    • 90% if the apprentice is aged 19 or over and/or the employer has over 50 employees (including the apprentice(s))

These payments are taken monthly

The training provider you select to deliver your apprenticeship training will draw down funding directly from Government and will invoice the employer for the 10%, if applicable

Payments are held in an online Apprenticeship Service Account

For employers with payroll’s that border £3m, they will start paying the Levy if at any point payroll reaches or exceeds £3m.

Monies in this account can be used by the employer to purchase apprenticeship training by selecting an employer through the Apprenticeship Service and authorising payment

 

Monies that remain unused in this account after a 24 month period will be taken back by HMRC for distribution to fund apprenticeships for non-levy/ co-investing employers

 

Employer can transfer up to 10% of their Levy funding to another employer, through the Apprenticeship Service Account, should they wish to

 


From April 2019 it is the government's ambition that all employers access funding for apprenticeships through the online Apprenticeship Service Account. This does not mean that employers with less than £3m payroll will pay the levy, they will just access funding through the same mechanism. More information about this will be provided in due course.

Find out how to register and use the apprenticeship service as an employer

Contact us:

If you have any queries, please don't hesitate to contact us.

Computing students preparing for the Digital Toybox show

Share your levy with your supply chain

From April 2018, employers have been permitted to transfer 10% of their levy funding to companies within their supply chain for the benefit of the productivity chain. From April 2019, this will increase to 25%.

If you believe you are unlikely to spend your full levy allocation and/or that you feel there would be added benefit to your business in supporting and boosting the skills and knowledge within your supply chain partners, then this is something to consider.

It is a simple transaction and you can monitor this in the same way as your own levy spend.

If you are interested in exploring this, the apprenticeship team at London Met would be happy to discuss how the process works.

Further information: