Levy and funding
The apprenticeship levy is a pot of money some companies pay into, which all businesses have access to spend on the training costs of apprenticeships. Companies fall into two categories: levy-payers (who pay into the pot) and non-levy payers (who do not).
If your company’s UK paybill is above £3million per year it will pay 0.5% of its payroll into the apprenticeship levy on a monthly basis, and so will be a levy payer. Employers who aren’t connected to another company or charity will have an apprenticeship levy allowance of £15,000 each year. The allowance reduces the amount of apprenticeship levy you have to pay by £15,000 across the year.
These funds can then be used to pay for apprenticeship training via the digital account.
It’s worth knowing: each month’s funds expire after 24 months. For example, May 2017 funds expire in May 2019. The Government tops up the levy payer’s pot up by 10% for the English paybill only.
If your company’s payroll is below £3million per year then it will not pay into the levy. Non-levy paying employers can still send their staff on an apprenticeship and share the cost of training and assessing their apprentices with the Government - this is called ‘co-investment’. From April 2019, you will pay 5% towards to the cost of apprenticeship training and the Government will pay the other 90%, up to the funding band maximum.
It’s worth knowing: as of December 2017, LSBU is one of only two London universities with government funding to train apprentices from non-levy paying employers.
Employers with fewer than 50 people working for them are able to train 16-18 year old apprentices as well as 19-24 year olds who were formerly in care or who have an education and Health and Care Plan, without making a contribution towards the costs of training and assessment up to the funding band maximum. Instead, the Government will pay 100% of the training costs for these individuals.
Apprenticeship standards are all assigned a funding band by the Government – these funding bands are the maximum amount the Government will fund via the levy towards a given apprenticeship standard. There are 15 funding bands ranging from £1,000 to £27,000.
- You can only spend your apprenticeship funding on the training costs of approved apprenticeship standards or frameworks.
- For staff on apprenticeships who live in England (or whose workplace is in England for 50% of their apprenticeship) or have lived in the EEA for 3 years, where a visa is issued, the apprentice must have a visa and employment for the full duration of the apprenticeship.
- Your training provider must be published on the Register of Apprenticeship Training Organisations. LSBU is on this Register.
- When the apprenticeship requires, an End-point Assessment organisation on the Register of End-Point Assessment Organisations.
- Every apprenticeship has a funding cap - this sets the maximum levy or co-funded investment that can be made for this apprenticeship.
- If the cost of the Apprenticeship is above the funding cap, the employer must pay any additional costs as agreed with the training provider.
- The main provider is the funding route for all apprenticeship funding.
There are additional £1,000 incentive payments paid direct to you for certain categories of apprentice. These are apprentices who are either aged 16–18 or 19–24 and have previously been in care or have a Local Authority Education, Health and Care plan in place. Businesses with fewer than 50 employees can benefit from the small employer co-investment waiver.
Incentive payments come to the University via the government and once the University receives this, the University pays the employers. The money comes in two instalments: 90 days after the start (50%) and 365 days later (50%) for the 16–18 year olds.
The Government has produced further information on apprenticeship funding.
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