In April 2017 the Government is introducing its new apprenticeship scheme, which continues its commitment to encourage employers to invest in apprenticeships.
From 5th April 2017, large employers who spend more than £3 million annually on salaries will be required to pay an apprenticeship levy. This will be charged at 0.5% of their total employee earnings subject to Class 1 secondary NICs and eligible employers will have an allowance of £15,000. The levy will be paid monthly into an online apprenticeship account, which the Government will top up with an additional 10%. Employers will then be able to use this to fund apprenticeship training and assessments but they must use the funds within 24 months of paying the levy.
Although the majority of employers will not fall within the apprenticeship levy category (the Government estimates less than 2%), they may still benefit from the apprenticeship scheme. The Government say they are willing to "co-invest” with smaller employers, which may result in the employer only paying 10% towards apprenticeship training and assessment costs and the Government paying 90% of training and assessment costs. This is subject to various funding bands depending on the type of apprenticeship. The Government intends for all employers to be able to use an online apprenticeship account by 2020, which will allow employers to effectively manage and negotiate training payments.
It is important that eligible employers familiarise themselves with the apprenticeship levy and the online account to ensure that they make use of the funding within 24 months. However, both large and small employers have the potential to benefit from the Government’s apprenticeship scheme, and smaller employers may want to consider whether the additional Government funding for apprenticeship training and assessment could make apprentices a valuable asset to the business. Employers should check what funding bands are available to their sector to establish exactly what funding will be available.
The levy funding is not available to apprentices who started an apprenticeship programme before 1st May 2017.
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