Apprenticeship Levy

Five ways to capitalise on the Apprenticeship Levy

The Apprenticeship Levy came into effect in April 2017.

Employers with an annual pay bill of over £3 million are required to pay at 0.5% on their pay bill each month. Here's how you can capitalise on the new Levy.

The Apprenticeship Levy is a cornerstone of the government’s skills agenda, creating a system that puts employers at the heart of designing and funding apprenticeships to support productivity and growth.

Here are five key areas to consider:

  1. Levy funds: the Levy will be payable each month to HMRC, amounting to a significant cost over time and a response should be considered as early as possible.
    Each employer will have to register for a Digital Apprenticeship Service account, where Levy amounts will be topped-up with a further 10% from government, creating a funding pot to spend on apprenticeship training.
    The funds will be available for two years, after they were first paid, providing a window to fund training that might otherwise be a separate cost or perhaps underinvested in.
  2. Further government funding: to encourage engagement with the new system, government have proposed funding for apprenticeship training at 90%, if employers go above their Levy funds.
    This could mean a significant investment from government in skills development and training for your organisation. To really benefit, there should be a need for skills and resource in your teams, as employers will still be required to pay apprentice wages like any other employee.
    From an employment tax perspective, there is a National Insurance exemption for Employer NIC on 16-25-year-old apprentices, meaning a potential tax saving of 13.8% on their wages.
  3. Available training: the wider context is whether there is demand for developing certain skills, could apprenticeships provide that training? What skill or resource requirements will you have in the near future?
    For entry level roles, apprenticeship training could provide the core skills for that role, such as with IT, administrative processes or project management. Training can be used for upskilling existing employees, furthering specialising in a technical area or through management training up to master-degree level. A notable example is the Chartered Manager Degree Apprenticeship, which training content includes a degree in Business and Management. Training can be wide-ranging and it is perhaps first best to consider your organisational needs for resourcing requirements and specific skills.
  4. Resourcing advantages: it could be for new hires or upskilling existing employees, with apprenticeships providing a means to recruit and also progress individuals. Hiring into entry level or support roles might free up resource in the wider-team, encourage knowledge sharing and develop management potential.
    If progression planning is a priority for some teams, having a pipeline of talent coming through is naturally important and training can be used to develop future or current managers directly. Apprentices are required to spend 20% of their time in off-the-job training, which can be completed in the workplace, yet should still be considered from a resourcing perspective.
  5. Diversity and social inclusion: apprenticeships provide an opportunity for young people to specialise in a sector or functional role and really apply themselves. Providing an alternative route to the traditional university course, individuals can still receive training and gain qualifications, including up to degree level.
    The training and experience of an apprenticeship could mean they discover a passion or talent that would have previously gone unnoticed, making this individual a great asset for your organisation.
Apprenticeship Levy

Visit our Apprenticeship Levy hub for our expert insight on turning the levy into an opportunity.

Contact our Apprenticeship Levy team to find out more or to discuss turning the Apprenticeship Levy into an opportunity.

 Apprenticeship Levy calculator

Try our calculator to view your Levy liability, amount available to spend and how many training schemes this might mean.