What is a non-levy paying employer?
How you pay for an apprenticeship varies depending on the size and wage bill of your organisation.
The apprenticeship levy is a UK tax on employers which is used to fund apprenticeship training. Introduced at the start of the 2017/18 tax year, it is payable by all employers with an annual wage bill of more than £3 million, at a rate of 0.5% of their total wage bill. If your wage bill is less than £3 million, then you will be classed as a non-levy paying employer.
Non-levy employers share the cost of training and assessing their apprentices with the government - this is called co-investment.
How much does the government pay towards apprenticeships?
You will pay 5% towards the cost of apprenticeship training and assessment - the government pays the remaining 95%.
The non-levy apprenticeship is paid for via the Apprenticeship Service, a government platform used by employers to fund and manage apprenticeships. For the apprenticeship to be funded, the apprentices are added to the online account and the training provider draws down a monthly payment from the government. Lifetime has a dedicated team to support you through the process of setting up your Apprenticeship Service account.
Since 1 November 2021, employers can now reserve funds up to three months before an apprenticeship is planned to start. Each reservation will expire two months after the reservation month (a total of three months), if the employer does not make a commitment on the apprenticeship service to start an apprentice. For example, in November 2022 employers will be able to reserve funds three months in advance for a start in January 2023. If the reservation is not used by March 2023, it will expire.
Where an employer is required to pay the 5% co-investment, Lifetime will raise an invoice for the full amount once the learner has been signed onto programme. Payment terms are 30 days from the invoice date, however an employer can pay in 12 monthly instalments if they complete and return a direct debit mandate.
At the end of the apprenticeship, the learner is assessed through an End-point Assessment. The government will also fund 95% of the cost of the End-point Assessment (5% is invoiced upfront along with the cost of the apprenticeship standard but can be paid monthly).
Levy paying organisations can transfer levy funds to other organisations to help fund apprenticeships. They can transfer up to 25% of their levy pot per year. As a non-levy paying organisation the full cost can be covered on your behalf or if you require more than your allocated 10 apprentices a levy transfer can be a solution.
The government also offer a £1,000 incentive payment for hiring a new apprentice if they are aged 16-18 years old; or if they are under 25 and have an education, health and care plan or have been in the care of their local authority.
How many apprentices can a non-levy employer have?
If your organisation employs less than 50 people and the learner is 16-18 years old, the government will pay 100% of the apprenticeship. For non-levy paying companies, the government will help fund a maximum of 10 apprentices. If they would like more than 10 apprentices, these can be funded via a levy transfer from another organisation.
Funding for non-levy apprenticeships
Have a specific question about apprenticeships for non-levy paying organisations? Talk to us for expert advice or explore more of our Knowledge Hub.