Apprenticeship levy and funding

Guides for funding Apprenticeships

In April 2017, the government changed the way that Apprenticeships are funded. 

Employers with a wage bill over £3 million annualy are now required to contribute to the Apprenticeship Levy, in addition there have been changes to the funding for Apprenticeship training for all employers. Employers that pay into the Apprenticeship Levy are then able to use this fund to invest into the development of their workforce.

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 exisitng 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 nvest in apprenticeships. This change affects employers in all sectors. The levy is only paid on annual paybills in excess of £3 million, which means that less than 2% of UK employers contribute to it.

How are SMEs affected by the Levy?

Businesses with an annual wage bill less than £3 million will have the cost of Apprenticeships partially funded by the government. The government will contribute 95% of the fees and your business will pay only 5%.

In addition, businesses with less than 50 employees who employ apprentices aged 18 and under will have the full cost of their training funded by the government.

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

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

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

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 exisiting staff via Apprenticeships
  • improving staff retention
  • futureproofing your teams

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

Additional resources

  • Guidelines - Official government information, guidance and advice on the Apprenticeship Levy can be found here
  • Work out your Levy payments - have released some guidance for working out your Levy bill which can be found here