The Apprenticeship Levy – FAQs

by Bee Heller
January 24, 2017

What is the Apprenticeship Levy?

The Apprenticeship Levy is a 0.5% wage bill levy payable by all employers with a payroll exceeding £3million. It will be introduced in April 2017. The Levy paid will be topped up by an additional 10% from the government and will be available to employers to fund apprenticeship training and assessment through registered providers.

Why is the Apprenticeship Levy being introduced?

The aim of the Apprenticeship Levy is to encourage employers to invest in apprenticeship training to help the government meet its target of 3 million apprenticeships by 2020. This is part of the government’s strategy to address the skills gap currently affecting many industries and provide a UK workforce that can support a prosperous future economy.

How will the Apprenticeship Levy work?

The Levy will be taken automatically by HMRC via the PAYE process and paid in to a digital account. The funds in this digital account will be topped up by an additional 10% from government and made available to employers to spend on apprenticeship training with registered training providers.

This new system of apprenticeship training is designed to be employer lead with the intention of improving the quality and relevance of apprenticeships. Employers are responsible for shaping the new ‘Apprenticeship Standards’. These Standards set out the core skills, knowledge and behaviours a person needs to be competent in a particular job. For apprentices, the competencies and qualifications they achieve through this new system will be recognised nationwide.

What can Levy funds pay for?

Levy funds can pay for all apprenticeship training and assessment delivered by registered training providers and assessors. Your existing employees are eligible for apprenticeship training as long as the apprenticeship is relevant to their role and supports them in developing new skills and knowledge.

The new Apprenticeship Standards cover a wide variety of roles and skill levels from NVQs up to degrees. The new system allows employers to develop their own Standards and set the qualification level that is most appropriate to the job role and their business needs. Apprenticeship Standards can be developed for any key skills a business determines that they need including people management skills.

Levy funding cannot be used for apprentice wages, travel or subsistence, managerial costs, work placement programmes or the cost of setting up an apprenticeship programme.

What’s involved in an apprenticeship?

An apprenticeship involves a mixture of on the job and classroom or structured training. It also includes assessment to make sure key skills have been developed. All apprentices receive a qualification at the end of their training programme. Apprenticeships must last at least 12 months but could take up to 5 years for degree level qualifications.

What should my organisation be doing?

If your payroll is over £3million your organisation will automatically start paying the Levy in April 2017. If you want to make the most of the funding that will become available to you, you should be planning an approach to developing your own apprenticeship programmes now.

How can The Pioneers help?

1. Providing specialist people management training

We have applied to be registered as a subcontractor training provider. We can provide specialist people management training for first time supervisors, general managers, area managers and HR professionals as part of broader apprenticeship programmes for roles requiring these skills. Our areas of expertise include: changing behaviour and creating a high performance culture; improving decision making and use of management information; communicating effectively and motivating a team; the practical skills of multisite management; defining a management model and ways of working. You can find more information on the people management training we deliver here.

2. Designing and structuring apprenticeship programmes to maximise the positive impact they have on your business

We think there’s a risk that organisations race to find a way to spend their Apprenticeship Levy fund in order to avoid losing it without considering how to develop an apprenticeship programme that actually has a positive impact on the performance of their business. If an apprenticeship programme is not delivering value to your business then it has the potential to be a significant cost in terms of man hours.

We can help organisations structure and design apprenticeship programmes that deliver demonstrable value to the business by: taking an evidence based approach to calculating your return on investment; helping you to identify where you’ll get most return; and, considering how you can structure your apprenticeship programmes so that your best people are teaching the rest. You can find out more about our approach in this article: ‘How should you spend your Apprenticeship Levy?

We’re running a breakfast meeting discussing how you can make the most of the Apprenticeship Levy on Thursday 9th February. It’s free to attend – book your place here.


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