Introduced in April 2017, all employers with a pay bill over £3 million each year, now have to pay the apprenticeship levy and report it to HMRC through their PAYE process. The Levy is charged at 0.5% of an employer’s annual pay bill. In addition they receive a levy allowance of £15,000 annually to offset against their levy reducing the amount of apprenticeship levy to be paid.
The government adds a further 10% to each monthly levy payment. The levy payment is held in a digital account, which is set up at the apprenticeship service and managed by the employer.
The levy can be used to pay for apprenticeship training and end point assessment costs. Levy employers can use their funds to support existing employees as long as they are undertaking an approved apprenticeship standard or framework.
The apprenticeship levy cannot be used to support the payment of wages.
The Digital Apprenticeship Service (DAS) is designed to help employers access new apprenticeship standards, training providers and funding for apprenticeships through an online service account. Employers registered for the service can look at training providers who can deliver apprenticeship training and access any available funding.
Click here for more information and how to register.
The apprenticeship service only supports the English apprenticeship system. The amount of funds in each employer’s account will depend on how many of their employees live in England and the proportion of their paybill paid to these employees. This is called the ‘English percentage’.
HMRC calculates your ‘English percentage’ from the information you provide about your paybill, and uses it to put the right proportion of levy funds in your account. Your latest English percentage will be visible in your account.
Funds show in your apprenticeship service account on the 23rd day of each month.
On recruiting an apprentice the training and end point assessment cost is negotiated with the approved provider up to a maximum Apprenticeship Funding Band depending upon the assessed needs of the apprentice. The Government will deduct this amount from your digital account in monthly instalments over the life of the apprenticeship and pass directly to the provider.
Funds in the digital fund remain available for 24 months from the date of payment. Any amount that remains unspent after that period will expire and will be reclaimed by HMRC, including the 10% contribution.