Everything you need to know about the Apprenticeship Levy

Apprenticeship LevyFollowing a recent Resourcing Think Tank titled ‘Responding to the Apprenticeship Levy’, we wanted to provide a simple resource to answer all your questions around what the Levy actually means. Kate Temple-Brown, Apprenticeship Levy consultant and enthusiast, addresses the key headlines of the Levy below:

Apprenticeship Levy – the background

  • From April 2017 a new tax is being introduced for those firms spending more than £3,000,000 on PAYE
  • The first payment of your levy will be paid direct to HMRC on April 6th 2017 and monthly thereafter.
  • The Apprenticeship Levy – it is still happening despite Brexit
  • The purpose of the levy is to “develop vocational skills, and to increase the quantity and quality of apprenticeships
  • The government has committed to an additional 3 million apprenticeships in England by 2020
  • To achieve its objectives the Government needs to generate considerable revenue to distribute to SMEs in particular to encourage the hiring of Apprenticeships; it also needs to encourage bigger companies to look sympathetically at Apprenticeships

What is an Apprenticeship? 

  • The eligibility criteria has changed, An Apprenticeship is:
  • A modular programme of learning that lasts a minimum of 12 months and a day
  • Available to anyone of any age, for existing or new employees at any level
  • A nationally recognised and accredited course – “Standard”
  • Organisations can work together to create a Trailblazer standard if relevant standards do not currently exist
  • No longer only available to those who have not already studied at a higher education level. As long as the subject of the apprenticeship is different subject to the degree
  • Achieved by on the job training and at least 20% off the job study
  • Assessed at the end of the program by certified assessors against standards
  • The level of learning can vary from GCSE (2) to Masters Level (7)

Spending your Levy

  • The Levy is only allowed to be spent on Training and Development of Apprentices.
  • Your Levy pot will be transferred into digital vouchers that will sit in a digital account – DAS
  • An employee must partner with Registered Training Providers who are able to access the digital vouchers via the Digital Apprenticeship Service website
  • Eligible learners must have an HMRC recognised English Postcode
  • Digital vouchers have a 24 month life after which they will be transferred to the government’s central funding post to be distributed to other employees
  • In 2018 10% of your levy may be spent on training and developing employees of your suppliers who currently do not pay the levy
  • Each different level and standard has a recommended funding cap which was decreed by the Government. Determined by level and subject, the cost of training is between £5,000-£27,000

What does the Levy mean for existing employees?

  • With the new Apprenticeship reforms, employers can spend their levy on existing employees at any level of seniority
  • Par learning eligibility has been changed so that employees with a degree can now study an apprenticeship in any different subject to their degree
  • There are new level 5 and 7 (Masters) Leadership and Management Apprenticeship Standards that can be used as Management Development Courses certified by both CMI and ILM
  • These are known as Higher Apprenticeships
  • Once employers have spent their Levy, they are eligible to Government funding totalling £9 in every £10 of training costs
  • Organisations will not pay the NI contribution of any employees under 25 who are studying on an apprenticeship standard. That will save you13% of their salary.

For further information on the Levy including a deeper dive into how it will work, the impact it’s likely to have, and the sorts of questions you should be asking your business please click here.

Kate Temple-Brown

Written by , Founder at Aequalis Strategic Apprenticeships

Aequalis was started to help companies to understand how to maximise the opportunity of the Apprenticeship Levy in 2017. We get under the client's skin and look holistically at all of their development and talent strategies to help them articulate an attractive and engaging Development Value Proposition for new and current employees. Our aim is not only to help companies spend their digital account wisely but also see it as an exciting opportunity to hire, develop and retain the best talent for their organisation.

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