When was the apprenticeship levy start date?
The apprenticeship levy came into effect from 6th April 2017 having been proposed in the 2015 budget by the then-chancellor George Osborne. Any employer subject to the payroll threshold of more than £3 million would start paying their monthly levy from that date.
Apprenticeship levy explained
The apprenticeship levy was introduced as a government scheme to fund apprenticeships. Apprenticeship levy rules state that employers with a payroll of more than £3 million must pay a 0.5% levy on their total payroll, offset by a £15,000 government allowance. The levy is paid monthly through PAYE alongside income tax and national insurance contributions.
Levy contributions appear in a digital account which can be used by the employer to arrange and pay for apprenticeship training. The funds can only be spent on apprenticeship training or End-point Assessment according to apprenticeship levy rules.
After 24 months any unused levy funds expire and return to the government.
Non levy-paying employers can pay 5% of the apprenticeship course cost, and the government will cover the remaining 95% through the process of ‘co-investment’.
If your payroll is more than £3 million, you’re already invested in the levy.
When is the apprenticeship levy payable?
All eligible employers will have to pay the 0.5% apprenticeship levy amount at the end of every month. This is collected automatically by HMRC through the employer’s PAYE system.
Who can use the apprenticeship levy?
The apprenticeship levy can only be used within England, as apprenticeship legislation differs across the devolved nations. For this reason, apprentices funded by the levy must work at last 50% of their time within England. The amount of levy you can access is directly linked to the proportion of your employees living in England.
Unlevied employers can use the levy through a transfer of funds from a levy paying employer. Employers can transfer up to 25% of their annual levy fund to another business, for example a company in its supply chain.
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How to use the apprenticeship levy
The levy funds sit in a digital ‘apprenticeship service’ account used by employers to fund apprenticeship training provision. The account is used to manage levy funding, track apprentices, find training providers, or transfer unused funds.
Any levy funds are topped up each month with a 10% government contribution. Any levy funds expire after 24 months, so it is vital to utilise your levy as soon as possible.
Once a programme and training provider has been selected and a price agreed, your provider will be paid out of your digital account every month. Apprenticeship levy rules state that your levy must only be used to pay for apprenticeship training and End-point Assessment, and cannot be used to pay apprentice wages.
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What happens to unused apprenticeship levy funds?
Your funds will expire 24 months after the date submitted, at which point unused funds will default back to the government. This is to incentivise regular expenditure on high-quality apprenticeship training. When paying for apprenticeship training, the government will always use the oldest funds in your account first as to minimise the window for fund expiry.