Funding, Incentives and the apprenticeship levy

Apprenticeship funding guide

Since 1 May, 2017 employers with a wage bill of more than £3 million will pay the Apprenticeship Levy

  • The Apprenticeship Levy requires all employers to pay 0.5% of any wage bill over £3 million into the Government’s new apprenticeship service, to pay for apprenticeship course fees in England.

  • Employers paying the Apprenticeship Levy will be able to access the funds they have paid to cover the cost of apprentice training through a new digital account. The Government top-up this amount by an additional 5%.

Selecting an apprenticeship training provider

  • Under the new system, you will be expected to approach an apprenticeship training provider for apprenticeship training, such as Skills for Security Apprenticeships.

  • You can select an apprenticeship training provider from the Government’s approved list. You will need to negotiate the cost of delivering the training and sign a contract with the training provider and the apprentice to begin any apprenticeship.

Paying for training from the Appenticeship Levy

  • The Government has set funding bands to determine the maximum you can spend on each apprenticeship training course through your digital account. Employers will pay in full any amount they agree with the training provider above this maximum level. The new funding bands will vary by apprenticeship occupation and level, but will not vary by age as they did under the previous system.

  • You will be entitled to a £1,000 incentive payment for recruiting a 16-18 year old apprentice or 19-24 year old apprentice with an Education, Health and Care (EHC) plan. This will be paid to you in 2 instalments by your training provider – £500 after 3 months and £500 after 12 months.

  • Funds in your digital account will expire after 24 months if not used.

  • The changes don’t affect apprentices who started an apprenticeship prior to 1 May 2017. 

For employers who do not pay the Apprenticeship Levy

  • If your company has more than 50 employees but still doesn’t pay the levy, you will pay 5% of the training costs of each apprentice you take on, direct to a college from the Government’s approved list.

  • If you are a small employer (fewer than 50 employees) there will be no cost towards training an apprentice who is under 18 or aged 19-24 with an EHC plan, providing the cost of their training is within the maximum funding band.

  • Employers who do not pay the Apprenticeship Levy will be subject to the same apprenticeship funding bands as employers who do.

  • £1,000 is available to any employer taking on a 16-18 year old apprentice, or a 19-24 year old with an EHC plan – the same as for levy paying employers.

  • From 2020, you will access funding through a new digital account, in the same way as levy paying employers have done since 2017, to pay for the costs of training.

Different rules apply to apprenticeship funding in Scotland and Wales, where funding will be accessed in the same way as it is at present.

Additional rules also apply to groups of companies with the same owner (Connected Companies) and you should contact HMRC on 0300 200 3200 for more information.

How can you access apprenticeship funding through the new system

Skills for Security have a skilled and experienced team that can provide guidance and support to access funding - contact us at info@skillsforsecurity.org.uk or call 01905 744 000.

How the new apprenticeship funding works

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