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Government funding for apprenticeships is either by co-investment for smaller employers, or via the apprentice levy for larger employers. The apprentice levy is designed to encourage businesses to invest in apprentices. Its aims are to:
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Provide all businesses, regardless of size, with sustainable long-term funding for apprenticeships
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Give employers control of apprenticeship funding, enabling them to commission custom-built training that will help their businesses to grow.
For apprenticeship funding purposes, employers fall into one of two groups:
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£££ Levy-payers (large employers with an annual wage bill over £3m)
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£ Non-levy-payers (smaller employers with an annual wage bill less than £3m)
The apprenticeship funding guidance given here applies to apprenticeships in England only. Wales, Scotland and Northern Ireland have their own arrangements for funding apprenticeships.
What is the aim of levy funding?
Funding for apprenticeships
Government funding for apprenticeships is either by co-investment for smaller employers, or via the apprentice levy for larger employers. The apprentice levy is designed to encourage businesses to invest in apprentices.
Apprenticeship Funding for Levy-Paying Employers
The apprentice levy was introduced to secure a long-term funding solution for high quality apprenticeships that better meet employer needs. Although ALL employers will benefit from the levy, in terms of extra funding available for training – only the largest employers will have to contribute towards it.
Example: Employer with an annual pay bill of £5,000,000
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Levy sum = 0.5% x £5,000,000 = £25,000
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Subtract levy allowance: £25,000 – £15,000
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Annual levy payment = £10,000
Levy paying employers access apprenticeship funding via the Apprenticeship Service (AS)
Key facts about the apprentice levy
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Only large employers with an annual wage of over £3m pay the levy
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The Apprentice Levy is charged at 0.5% of a company’s gross wage bill
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HMRC collect the levy monthly through the PAYE system
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Government ‘tops-up’ employers monthly levy by 10%
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Employers receive an annual allowance of £15,000 to offset against their levy payment
The apprenticeship service is a computerised service, whereby levy-paying employers use an online account to access their levy fund for training apprentices. Money from the levy can only be used to pay for apprenticeship training with an approved apprenticeship training provider. The AS also holds lists of approved apprenticeship training providers. After choosing an approved provider and negotiating a price for training employers can make payments to them directly from their account.
What it is and how it works
Special Circumstances Where a levy paying employer doesn’t have enough in their digital account to pay for their apprentices training, they will receive co-investment at the same level as non-levy payers.
Employers need to complete an Employer Agreement with the Education and Skills Funding Agency (ESFA) to pay training providers to carry out apprenticeship training.
Employers with wage bills of less than £3 million per annum receive government funding for apprenticeships via co-investment. Employers only pay 5% towards the cost of training and end-point assessment, with government funding the remaining 95%, up to the funding band maximum.
Apprenticeship Funding for Non Levy Paying Employers
Extra Support for Small Employers
Employers with less than 50 employees will not have to contribute their 5% co-investment if their apprentice is:
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aged between 16-18 years
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aged between 19-24 and has a local authority education, health & care plan or has been in the care of a local authority.
For more information on apprenticeship funding download the links below, contact us via our contact form or call us on: 0113 3970 398.
All apprenticeship standards are assigned to one of 30 funding bands. Funding bands indicate the maximum that government will contribute towards apprenticeship training and end-point assessment. Employers are expected to negotiate prices with their approved training provider rather than consider the funding band the ‘price’ of an apprenticeship.
About apprenticeship funding
Apprenticeship funding rules
Managing apprenticeship funds
Apprenticeship Funding in England
Employers are responsible for paying their apprentice for the usual working hours plus any training they do as part of the apprenticeship. Apprentices must be paid at least the National Minimum Wage rate. This varies according to their age and the year of apprenticeship training they’re in.
Paying your apprentice
As of 2024, it was recently announced there is a significant 21% increase in the minimum hourly wage for apprentices, raising it from £5.28 to £6.40, effective from April 2024.
For more information on apprenticeship funding download the links below, contact us via our contact form or call us on: 0113 3970 398.