Understanding the apprenticeship levy
The apprenticeship levy was introduced in April 2017 as a UK tax on employers to fund apprenticeship training. In the current tax year 2018-19 it is payable by all employers with an annual pay bill of more than £3 million at a rate of 0.5% of their total pay bill. A percentage of levy funds can also be gifted to another organisation or organisation(s) in agreement with the levy funded organisation.
How is the apprenticeship levy calculated?
Here’s an example of how the levy is calculated:
- Levy declared to HMRC through the PAYE process
- Multiplied by % of PAYE bill paid to workforce living in England
- Plus a 10% government top-up on this amount
Note: Monthly levy will vary at every organisation, as this is based on 0.5% of their total pay bill.
What is an apprenticeship levy transfer?
From April 2018 employers who pay the apprenticeship levy have been able to transfer up to 10% of their levy to other employers, increasing to 25% from April 2019. Watch this EFSA video for more information on how this works.
How much levy funding can be transferred to another organisation?
Levy-paying employers can transfer a maximum amount of 10% of their annual funds. This will increase 25% from April 2019. They can make transfers from their apprenticeship account to as many employers as they choose based on their levy funding budget.
How are levy transfer payments made?
Payments will be made monthly from the sending employers account to the receiving employers account. Transfer transactions will be clearly marked in the finance section of the portal for sending employers.
How long do levy transfer payments continue?
Funds will transfer from the sending employer until the apprentice completes their apprenticeship training or unless the apprenticeship is stopped by the receiving employer.
Note: Transfer funds debit from the sending employer’s account before other commitments.
What are the benefits of transferring or gifting levy for the sending or funding employer?
You can transfer funds to one or multiple employers, directing funds in a way that benefits your organisation, utilising any levy funds due to expire productively.
Support the viability of apprenticeship programmes: Increasing number of people onto an apprenticeship programme cohort where the training provider requires a larger number to run the programme.
Outsourced services/supply chain: Set up an agreement with an outsourced service, or an organisation in your supply chain, to fund an apprentice who will indirectly support service delivery and patient experience.
What are the benefits of transferring or gifting levy to a receiving employer?
‘Training’ for the apprenticeship will be paid in full (no co-investment) to develop the existing workforce, increasing productivity and incentive for attracting new talent. It also allows non-Levy payers to access to all Training Providers on the Register of Approved Training Providers (RoATP) and support from the transferring (sending) employer.
What are the benefits of transferring or gifting levy to the NHS?
Gifting or transferring levy to other health and social care organisations provides an opportunity to productively use any unspent levy funds to support wider regional workforce skills and development needs. This translates to a positive impact on service delivery in both the funding and receiving organisations, as well as providing Trusts with the opportunity to engage with with employers in the existing NHS supply chain, improving care and service delivery system wide.
When will levy funds begin to expire?
From May 2019, unspent levy funds will expire 24 months after they enter the account. For example, funds entering an account in July 2017 that were not spent, will expire in July 2019.
Are there any examples of how other Trusts have used their apprenticeship levy?
Read the NHS Employers briefing on how you can optimise your apprenticeship levy here.
Where can I find more information and support?
Employers Guidance on apprenticeships
Education & Skills Funding Agency Executive agency of UK government sponsored by Dept. of Education
National Apprenticeship Service
Information on Apprenticeship standards
Career pathway and costings calculator support tools
Guidance on apprenticeship Terms & Conditions
Guidance on choosing a registered training provider:
Guidance on procuring a training provider:
Guidance on transferring or gifting levy funding: