Apprenticeship Funding: How It Will Work For Employers
In spring 2017 the way the government funds apprenticeships in England is changing. Employers with a wage bill of over £3m a year will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers. (The changes will not affect the way training for apprentices who started before 1 May 2017 are funded).
This document provides information on how the apprenticeship levy will work, how funding will operate on from 1 May 2017 (whether you pay the levy or not) and directs you to further sources of information.
**Levy Paying Employers**
The apprenticeship levy comes into effect on 6 April 2017 and applies to all employers operating in the UK with a pay bill over £3 million each year.
Your levy bill will be calculated based on the home address of your employees: you will only be liable for those living in England, and you will only be able to spend the money on apprenticeship training in England. (Scotland, Wales and Northern Ireland have their own arrangements to support apprenticeships).
You will report and pay your levy to HMRC through the PAYE process. Further details on how much you will need to pay can be found at: https://www.gov.uk/guidance/pay-apprenticeship-levy
The government will top-up the funds in your Apprenticeship Service account by 10’/», monthly. That means for every£1 that enters your account, you get £1.10 to spend.
The funds in your account will automatically expire 24 months after you paid them in, with earliest funds expiring first. Your account will notify you in good time when funds are due to expire so you will have the option to spend them on apprenticeship training if you wish.
Once you have declared the levy to HMRC, you will be able to access funding for apprenticeships through a new Apprenticeship Service account. Registration for the online Apprenticeship Service is now open to all levy-paying employers. [You can register Here](https:Ihww.gov.uk/guidance/manage-apprenticeship-funds)
Groups of companies can choose to register for a single Apprenticeship Service account if they wish. From 2018, it is hoped that an employer will be able to choose to transfer up to 10%» of the funds in their account to another company (e.g. a company in their supply chain); an employer working group is in place to establish how this will work.
Once you decide to buy apprenticeship training through the Apprenticeship Service, the funds will be taken from your account each month to pay the training provider.
You and your training provider must agree a total price for each apprenticeship, which includes the costs of training and assessment. The government has established apprenticeship funding bands to give you and your provider an indication of a realistic training cost. [Details of the funding bands can be found here.](https://www.gov.uk/government/publications/apprenticeship-funding-bands) You can use the funds from your account to pay the provider up to the funding band maximum; if you agree a price which is more than the maximum, you will need to cover the balance from elsewhere.
Once the apprenticeship training youve bought has started, monthly payments will be automatically taken from your account and sent to the provider. You will see funds entering your account each month as you pay the levy and funds leaving the account each month as you pay for training. If you find that the funds in your account arent (or wont be) enough to cover the full cost of the apprenticeship training and assessment youd like, you will need to co-invest 10% of the outstanding balance for that month and the government will pay the remaining 90%, up to the funding band maximum. (If the funding band maximum is exceeded you must pay all the additional costs).
**Employers who dont pay the Levy**
If your wage bill is less than £3m each year, you wont have to pay the levy but you may need to contribute towards any apprenticeship training you choose to do.
For employers with more than 50 employees, if you have agreed with your training provider that the apprenticeship training falls within the government funding bands for that apprenticeship, you will be required to co-invest 10% of the costs and the government will pay the rest, up to the maximum amount of government funding band available. If the apprenticeship training goes above the maximum funding band, the government will pay 90% of the maximum funding and you will need to find the full balance.
You will pay your contribution directly to the provider and you will be able to spread it over the lifetime of the apprenticeship, and agree a payment schedule with the provider. Your provider will be expected to show government that you have paid your contributions as a condition of government paying its contribution.
If you have less than 50 employees, your apprenticeship training will be fully funded, up to the maximum of the funding band available, if you recruit a 16-18 year old (*or a 19-24 year old who has an EHCP – Education, Health and Care Plan*).
If you do not pay the levy, you wont need to use the Apprenticeship Service until at least 2018.
**What you can spend apprenticeship funding on all employers**
Funds can only be used towards the costs of apprenticeship training and end point assessment with an approved training provider and approved assessment organisation. Funds cant be used on other costs associated with your apprentices or wider training effort e.g. wages, travel, brokerage costs, trainee ships, work placements etc.
**Further Information**
For further information, please visit the Government website by [clicking here](https:www.gov.uk/education/apprenticeships-traineeships-and-internships)
[**Download Now**](https://www.gov.uk/government/upIoads/system/upIoads/attachment_data/file/600849/EMPLOYER_RULES_V2_FINAL.pdf) Apprenticeship funding: rules and guidance for employers May 2017 to March 2018