The appren­tice­ship levy will come into effect from April 2017. With 40% of firms say­ing they’re unsure about the levy, we thought it would be worth shar­ing a round-up of the facts. 

The appren­tice­ship levy will offer indi­vid­u­als the chance to learn new skills and access new career paths. It aims to increase the focus on employ­ee train­ing out­side the work­place through busi­ness­es invest­ing in the scheme.

 3 benefits of the apprenticeship levy

  1. Employ­ers can cre­ate a new tal­ent pool for their busi­ness by iden­ti­fy­ing areas in their organ­i­sa­tion that need new skills or train­ing and hire appren­tices based on their com­pa­ny needs.
  2. Increas­ing appren­tice­ships will diver­si­fy the range of skills avail­able in the work­force address­ing skill short­ages that exist in the cur­rent market.
  3. The levy enables exist­ing employ­ees to retrain and explore new job oppor­tu­ni­ties pre­vi­ous­ly not available.

Will your business have to invest? 

The cur­rent gov­ern­ment guide­lines state organ­i­sa­tions with a pay­roll of £3 mil­lion and upwards will have to pay the equiv­a­lent of 0.5% of their pay­roll towards the levy start­ing from May 2017. How­ev­er, all firms will receive an allowance of £15,000.

For exam­ple:

An employ­er with an annu­al pay­roll bill of £5 million:

  • Levy sum: 0.5% x £5,000,000 = £25,000
  • Allowance: £25,000 – 15,000 = £10,000 annu­al payment

Employ­ers who pay the levy will also receive a 10% top­up from the gov­ern­ment towards their month­ly contributions. 

How to access the scheme?

To access the new dig­i­tal appren­tice ser­vice account, employ­ers will have to declare their levy pay­ments to the HMRC. In return for invest­ment into the appren­tice­ship levy, employ­ers will receive dig­i­tal vouch­ers to pay for train­ing appren­tices. Employ­ers will have 24 months to spend the vouch­ers before they expire. 

Employ­ers will use the dig­i­tal appren­tice­ship ser­vice to:

  • Choose an appren­tice­ship standard 
  • Select the appren­tice­ship train­ing provider
  • Select the organ­i­sa­tion that will assess their apprenticeship

What can the vouchers be spent on?

With an approved provider, dig­i­tal account funds can be used for appren­tice­ship train­ing and assessment.

Employ­ers can use the funds to train exist­ing or new employ­ees at appren­tice­ship lev­els high­er, low­er or equal to any exist­ing qual­i­fi­ca­tions they may have. 

After an organ­i­sa­tion has hired an appren­tice through the dig­i­tal sys­tem, funds will be deduct­ed from the com­pa­ny’s dig­i­tal account on a month­ly basis.

Who can be an apprentice? 

An appren­tice can be any age, an exist­ing employ­ee or a new hire. This is com­plete­ly up to the employ­er, how­ev­er, there are a few manda­to­ry rules:

  • The train­ing must last at least 12 months long
  • The appren­tice must spend at least 20% of their time on ‘off the job’ training 
  • The appren­tice must  be work­ing towards a gov­ern­ment approved stan­dard or framework 


apprenticeship levy banner

Of course, there are also chal­lenges asso­ci­at­ed with the appren­tice­ship levy. Watch this space for my next blog dis­cussing poten­tial draw­backs of the levy. 

Will the appren­tice­ship levy ben­e­fit your com­pa­ny? What skills are most valu­able in your indus­try? We would love to hear from you in the com­ments! Click here to learn how to suc­cess­ful­ly trans­fer skills across your organisation. 

5 impor­tant aspects of the appren­tice­ship levy
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