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The apprenticeship levy is coming: Here’s what you need to know
Holly Thompson is Director of Future Skills Vision, a company that specialises in skills development consultancy for both business and education providers. Here she explains how the apprenticeship levy will affect employers.
The apprenticeship levy will be introduced in April 2017. Large employers will be required to pay a levy where their wage bill exceeds £3 million. The levy was announced in the summer 2015, spending review and its introduction follows a period of consultation.
The drive behind the apprenticeship levy is to put employers firmly in control of their apprenticeship training, including where to purchase this training from. The apprenticeship levy will be underpinned by the government digital apprenticeship service, a mechanism to allow the exchange of funds between employers and training providers which will also be implemented in April 2017.
Here are the top ten things an employer needs to know about the apprenticeship levy, how it will work, and most importantly how you can use it to pay for apprenticeship training.
- Paying the Levy: Employers with over a £3 million wage bill will pay 0.5 percent of their total wage bill in the apprenticeship levy. Government will collect this payment through the HMRC and the PAYE process. All employers will receive a £15,000 levy allowance; this will be deducted from your total payment.
- Accessing the Funds: You will be able to access your funds to pay for apprenticeship training using the digital apprenticeship service. This will allow you to select the appropriate training, training provider and pay for this training.
- Top-Ups: The government will top up the amount you have to spend on a monthly basis by 10 percent.
- Expiry: Your funds will expire 24 months after they reach your account.
- Supply Chain: After the first year of the apprenticeship levy you will be able to transfer 10 percent of your apprenticeship levy to other employers in your supply chain to help them pay for apprenticeship training.
- Training: You can choose two types of training – either apprenticeship frameworks or apprenticeship Trailblazer standards – and both will be fundable through the levy.
- Assessment: The apprenticeship levy puts employers firmly in the driving seat to select the appropriate services you require. You will select the training provider and the assessment organisation and will agree the price you are willing to pay for the training and assessment.
- Pricing: You will agree a price and a suitable payment schedule with your training provider however funds will be sent to your account by government on a monthly basis.
- Age Bands: Apprentices are no longer funded by age band and any person of any age can complete an apprenticeship as long as this is new and justifiable training and qualifications for their job role.
- Employees: Apprentices don’t have to be new entrants. They can be existing employees who undertake apprenticeship training for CPD purposes or to progress within your organisation.
- Trailblazers: New job role specific qualifications allow you to undertake a seamless blend of traditional and professional qualifications specific to the job role you require. This offers a greater deal of flexibility in delivery.
A note for SMEs
If you do not have a £3 million wage bill you will not pay the levy, however this does not mean that you cannot access funding.
Government will pay a 90 percent contribution to the cost of any apprenticeship programme you wish an employee to undertake if you are able to contribute 10 percent of the total cost. This will be across the lifetime of the apprenticeship, does not have to be paid up front and can be negotiated with the provider you choose.
Under the digital apprenticeship service you will still be able choose a training provider, advertise vacancies and select an assessment organisation.