What is the Apprenticeship Levy?

The Apprenticeship Levy is a tax on employers implemented in April 2017 with the intention of aiding employers with staff training via Apprenticeships.

The tax is 0.5% of their total wage bill and is paid through P.A.Y.E to HMRC. Funds are held in a digital pot which can then be utilised for Apprentice recruitment and upskilling of existing staff.

Who pays into the Apprenticeship Levy?

The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships. This change affects employers in all sectors. The levy is only paid on annual pay bills over £3 million.

How are SMEs affected by the Levy?

From 1st April 2024, if your organisation doesn’t pay the Apprenticeship Levy, the government will fully fund Apprenticeship training costs, up to the funding band maximum, for Apprentices who meet the following criteria:

Aged 16 to 21 (or 15 if they turn 16 between the last Friday in June and 31st of August).

Aged 22 to 24 with an Education, Health and Care (EHC) plan or who have been in the care of their local authority and whose employer has fewer than 50 employees.

Additional incentives for hiring young Apprentices

Employers who take on Apprentices aged 16-18 receive additional financial support. Currently, you can benefit from an incentive payment of £1,000 per Apprentice, which can help cover the initial costs of recruitment, training, or additional support needed at the start of the employment. This payment is also available for Apprentices aged 18-24 with an Education, Health and Care (EHC) plan.

Where do my levy payments go and how can I access them?

After your business levy bill has been paid to HMRC, you will be able to set up an account on the government's Apprentice Service portal - The Direct Apprenticeships Service.

Using this service you will be able to view and access your funds, manage existing Apprenticeships, find training providers, and more.

Funding rules and requirements

There are specific funding rules that employers need to comply with to access government funding for Apprenticeships. These include working with approved training providers, like us! Ensuring the Apprenticeship lasts for at least 12 months and providing a minimum of 6 hours of off-the-job training during the Apprentice’s working hours.

How can I use my Levy payments?

Once your business starts to pay your monthly levy bill you will have 24 months to use the funds in your digital pot.

At The Sheffield College, our dedicated Apprenticeships+ Team are on hand to help you get the most out of your Apprenticeship Levy and can provide advice and guidance on:

• recruiting new Apprentices

• upskilling existing staff via Apprenticeships

• improving staff retention

• future-proofing your teams

To find out more or to start the recruitment process complete the contact form here.