Funding support

The apprenticeship levy was introduced in April 2017 as part of the government’s commitment to developing vocational skills and increasing the quantity and quality of apprenticeships.

The levy on UK employers to fund new apprenticeships is only payable by companies with an annual pay bill over £3 million. It’s charged at a rate of 0.5% of the pay bill (a minimum of £15,000). Each employer receives an allowance of £15,000 to offset against their levy payment.

In England, the government tops up an employer’s levy with an extra 10% which is paid directly to the employer’s apprenticeship account. However this can only be used towards the training and assessment of the apprentices and isn’t for apprentice wages or travel costs.

Your annual pay bill is all of your payments to employees that are subject to employer Class 1 secondary National Insurance contributions, such as wages, bonuses and commissions. You must include payments to:

• All employees earning below the Lower Earnings Limit and the Secondary Threshold
• Employees under the age of 21
• Apprentices under the age of 25

Your pay bill doesn’t include earnings:

• Of employees under the age of 16
• Of employees who aren’t subject to UK National Insurance contributions legislation
• On which Class 1A National Insurance contributions are payable, such as benefits in kind

If you’re not a levy paying employer, the government will fund at least 95% of the apprenticeship training and assessment costs. The government will ask you to fund 5% cash contribution to the cost, paid directly to the training provider.

You’re also able to receive a transfer of funds from a levy paying company, who may not be able to spend their levy allocation. They can transfer up to 25% of their levy funds to another employer.

We can also help you access transfer funding, so contact us to find out how.

Yes you can, there isn’t a limit. The government will require you to fund 5% of the training and assessment costs and they will cover the remaining 95%.

Additional payments and help are available to help cover the costs of training a 16-18 year old apprentice, or an apprentice aged 19-24 who has previously been in care or has a Local Authority Education, Health and Care Plan (EHCP).

• You’re not required to pay national insurance contributions for apprentices under the age of 25, on earnings below the higher tax rate of £827 a week (£43,000 a year)
• £1,000 is payable to you and the training provider, when training a 16-18 year old
• £1,000 is payable to you and the training provider, when training a 19-24 year old who has previously been in care or who has a local authority education, health and care plan

There are also incentive payments available for each apprentice that you take on, which can be spent on your organisation’s costs, such as the apprentice’s travel or salary. More information can be found in ‘Am I entitled to incentive payments?’

As a company, you’re eligible for an incentive payment if your employees are in England and you recruit an apprentice between 1 April 2021 and 30 September 2021. You’ll receive a payment of £3,000 for each apprentice of any age. You can apply for these payments between 1 June 2021 to 30 November 2021.

For apprentices taken on between 1 August 2020 and 31 March 2021, there are two levels of incentive payments, based on age:

• £2,000 for an apprentice aged 16-24
• £1,500 for an apprentice aged 25 or over

To receive incentive payments for this timeframe, you must apply before 31 May 2021.

To be eligible for an incentive payment, your apprentice must:

• Be a new employee to the business
• Have a contract of employment with a start date between the applicable dates listed above (inclusive)
• Not have been employed by the business within the six months prior to the contract start date

You can claim your incentive payment through your apprenticeship account. You’ll be paid in two equal instalments, provided the apprentice is still with you on days 90 and 365. So if you don’t already have one, you can start an apprenticeship account here.

You access your funds through the online apprenticeship service. The funds can only be used to pay for apprenticeship training for your employees.

No, there’s a time limit. You must spend the levy funds that you’ve paid within 24 months of paying them into your apprenticeship service account.

You have 24 months to use your funds once they enter your apprenticeship service account. After this point, your funds will expire. Any unspent levy funds within each financial year are used to support existing apprentices to complete their training, pay for apprenticeship training for smaller employers and additional payments to support apprentices.

Yes, you can. If you’re unlikely to spend your levy allocation, you can transfer up to 25% to another employer, such as a company in your supply chain. The company receiving the transferred funds will also be eligible to receive incentive payments. Read more here about the transfer of levy funds.