Levy Frequently Asked Questions

WHAT IS THE APPRENTICESHIP LEVY?

The Levy was put into place on the 6th April 2017 to create more funds for Apprenticeships. Whether or not your organisation pays into an Apprenticeship Levy account depends entirely on its annual payroll. Simply if the payroll is above £3 million, then there is 0.5% “Levy” on the payroll above this amount.

WHAT CAN I SPEND MY APPRENTICESHIP LEVY FUNDS ON?

Your Apprenticeship Levy funds can only be used to for apprenticeships that are approved for delivery by the Department for Education. There are new apprenticeships being launched each month and older, outdated apprenticeships are being withdrawn at the same time. NowSkills offers only approved apprenticeship programmes that your Levy funds can be used for.

WHAT CAN I NOT SPEND THE LEVY ON?

The funding rules for apprenticeship are clear and your levy funds are specifically designed to pay for new skills for apprentices. Although many may consider additional costs besides training part of the Apprenticeship, there are a selection of things in which the funds cannot be spent on. These include but are not limited to:

  • Wages
  • Travel and subsidiary costs
  • TraineeshipsWork placement programmes
  • Administration of your internal apprenticeship programme
  • Statutory licenses to practice
  • The costs of setting up an Apprenticeship programme

For the latest rules on funding or if you have questions, please contact us

 

HOW IS YOUR LEVY PAYMENT CALCULATED?

Example 1:

  • Annual Payroll: £5,000,000
  • No Levy payable on the first £3,000,000
  • 0.5% Levy is payable on £2,000,000 = £10,000
  • PLUS 10% Government Top-Up = £1,000
  • Amount available to spend on apprenticeships = £11,000
  • Example 2:
  • Annual Payroll: £12,500,000
  • No Levy payable on the first £3,000,000
  • 0.5% Levy is payable on £9,500,000 = £47,500
  • PLUS 10% Government Top-Up = £4,750
  • Amount available to spend on apprenticeships = £52,250

 

DO I HAVE TO SPEND ALL MY LEVY FUNDS?

Employers do not have to spend the funds, but the oldest monthly payment will expire and you will not be able to spend funds older than 24 months.  When you log into your Digital Account, you will see the monthly amounts paid in and available to spend, the oldest monies will be used first when you enrol new apprentices onto official programmes.

HOW WILL THE LEVY BENEFIT ME OR MY BUSINESS?

The levy is considered to be very beneficial to both employers and learners. The levy was set-up with a target of having an additional 3 million Apprenticeship starts by 2020. Also, by having more Apprenticeships, it aims to increase vocational skills and the quality and quantity of the programmes.

WHAT IF I SPEND ALL MY LEVY FUNDS?

If you spend all of your Apprenticeship Levy funds, you will then be moved into the co-investment band that is required to contribute 5% towards the cost of the programme, for this amount, NowSkills will raise an invoice. The remaining 95% will be co-funded by the government.