Apprenticeship funding

Levy-paying employers

UK employers with a pay bill of £3million or more will pay an apprenticeship levy. They can access this money through the Apprenticeship Service and it can only be used for apprenticeship training and development in their own organisation. If they don’t use the levy funds within two years then it goes back to the Government. If they use all their levy and want to train more apprentices, they'll pay for them using the same model as an SME. The levy is collected by HMRC via the PAYE process. There is a £15,000 allowance and the Government will top-up monthly funds for apprenticeship training by 10%. No employer is exempt.

For example:

Employer with a pay bill of £50,000,000
Levy sum: 0.5% x £50,000,000 = £250,000
Allowance: £250,000 - £15,000 = £235,000
After 10% top-up = £235,000 + £23,555 = £258,000 levy funds available to spend

Employers control where they spend their apprenticeship funding. The providers will get that money through their monthly Individualised Learner Record (ILR) return.

Non-levy paying (micro-businesses and SMEs)

SMEs with a pay bill under £3million contribute 10% of the total apprenticeship cost and the Government pays the remaining 90%. The same model is used for levy-paying employers who have exhausted their funds.

The Government will fund 100% of the cost of apprenticeship training for a 16-18 year old for businesses with fewer than 50 employees.

For more on how to manage your apprenticeship and funding, you could also talk to your local college or training provider. Alternatively your local chamber of commerce, local economic partnership or business improvement district.

The Apprenticeship Service is an online portal for employers to manage their levy account. It shows the amount of funding available and lets employers make virtual payments to providers for delivery of their apprenticeships. It includes the “Find an Apprenticeship Provider Tool” with details of nearby education providers. It will show which apprenticeships the provider offers as well as performance data so that employers can make informed decisions when negotiating funding and contributions with local providers.

The Government will contribute £2,000 towards the cost of apprenticeships for 16–18 year olds: £1,000 to the employer and £1,000 to the training provider.

If an employer is delivering their apprenticeships as an employer provider they can claim the full £2,000 incentive.

The Government pays the full cost of a 16-18 apprenticeship for any employer with fewer than 50 employees.

Apprenticeship standards and frameworks fall into one of the 15 funding bands. These are the maximum amount the Government considers is needed to deliver the apprenticeship. The upper limit of those bands goes from £1,500 to £27,000. Within the band, employers can negotiate with providers over the cost of delivery. The funding band is regardless of the apprentice’s age or location.

The 15 funding bands:

Apprenticeship funding is claimed through the education provider's Individualised Learner Record (ILR) data returns. There is guidance for providers in the ILR Manual. Employers and providers can use the ESFA funding guides for help with the funding requirements for apprenticeships.

Education providers and employer providers delivering apprenticeship standards and frameworks must collect and keep evidence such as invoices and payment receipts for audit by the ESFA. The ESFA is responsible for monitoring spend of public funds and will audit all providers’ data and financial information, to check they're following the funding rules for the levy.

Apprentices must get support in this depending on their level of prior achievement and what’s set out in the standard or framework. It isn’t funded by the levy but training providers will be funded for this directly by the Government.

You can have a look at our slides and webinars for apprenticeship funding guidance.

Or find out more about apprenticeship funding rules and government apprenticeship funding on gov.uk. We’ve picked out some useful ones here:

• Apprenticeship technical funding guide
• Apprenticeship funding and performance management rules 2017 to 2018
• Register of Apprenticeship Training Providers
• Employer-provider Guide
• Apprenticeship levy: how it will work
• Government spending and expected levy payments