The way apprenticeships are funded in the UK changed in 2016 with the introduction of the Apprenticeship Levy.
What Is the Apprenticeship Levy?
In its most basic sense, the Apprenticeship Levy is a tax on all UK employers that support the funding of apprenticeships.
It applies to both private and public companies which pay more £3 million in wages.
If a company pays over this threshold annually on wages, they must now pay 0.5% of their pay bill directly into a fund. The government then adds an extra 10% (in England) to the fund, which is used by employers across the UK to spend.
Who Will Benefit from the Apprenticeship Levy?
In short, everyone.
With more funding from high turnover employers and the government, the changes to apprenticeships through the Levy mean that the government will now fund apprenticeships for all ages.
Funding was previously targeted specifically depending on different factors in the old system – with the new Levy system in place, the government offers opportunities to more people, including existing staff at an organisation looking to expand their skills further.
I’m a non-levy paying employer – how does this work for me?
You can still benefit from the Levy – in fact, that’s the main reason the Levy exists.
If you were to take on an apprentice, 95% of the apprentice’s funding/training costs will be paid by the government up the maximum funding band available. You will need to pay 5% towards any costs for apprentices who are aged 19 or over.
For smaller companies – with fewer than 50 employees – the government will now pay all the costs for new apprentices aged 16 to 18 and also for those aged 19 to 24 who are leaving care or have a Local Authority and Healthcare plan.
Businesses with under 50 employees won’t pay anything if they employ apprentices under the age of 19, and will receive a £1,000 payment with an additional £1,000 payment to the training provider.
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