What is the Apprenticeship Levy?

Driven by its productivity agenda, the government has committed to achieving three million apprenticeship starts by summer 2020. If you have a UK paybill of over £3m, you will be required to pay 0.5% of that into a levy. Your levy payment will then be ring-fenced in the form of an electronic voucher (managed through your Apprenticeship Service (AS) account) to be used to purchase apprenticeship training.

The levy is the government’s solution to funding the increase in numbers and putting control of the funding in your hands.

Apprenticeships Standards Chart

Calculating your Apprenticeship Levy and managing your Apprenticeship Service (AS) account

Where you have a paybill over £3m, you will be charged a levy of 0.5% of that paybill. Your paybill is based on your total employee earnings subject to Class 1 secondary NICs. The 0.5% levy is on your full UK payroll bill, not just the amount over £3m. And although the levy is calculated based on your full UK paybill, you will only be able to only spend your English proportion on English apprenticeship training. To calculate how much you will have to spend through the English system, the government plans to use data that it already holds about the home address of your employees. The government will use this data to work out what proportion of your pay bill is paid to employees living in England. And if you are an employer in England who pays the levy and committed to apprenticeship training, you will be able to get more out than you pay into the levy. The government will apply a 10% top-up to your monthly funds, i.e. all funds entering your DAS account will be increased, so every £1 will be increased to £1.10 in value.

For more detailed information on calculating your apprenticeship levy, visit the Government’s Employers Guide to the Apprenticeship Levy or use its Apprenticeship Levy Calculator.

To pay for your apprenticeship training you will need to set up and manage your Apprenticeship Service (AS) account. Registrations are now open for you to set up your online account to give you greater control of your apprenticeship programmes and the distribution of funds you have contributed through the Apprenticeship Levy. It also enables you to find training providers, pay for training and assessment of apprentices in England; manage your funds and apprentices and perform account maintenance.

Capitalising on your Apprenticeship Levy

The levy can be claimed back and spent on apprenticeship training for all employees, at all levels of education and ages, including graduates who may be eligible for Level 6 or 7 apprenticeship programmes. You can therefore use the levy to offer a suite of interconnected talent propositions that enable your employees to develop their careers by transitioning from one level or programme to another. For example, a trainee on a pre-apprenticeship programme (traineeship) may join your foundation apprenticeships, a degree apprentice may progress to your internal graduate programme or your intermediate or advanced apprentices may move on to your higher or degree apprenticeships. You can also look to convert your current learning and development, professional qualifications or talent spend to the levy where an appropriate apprenticeship programme can replace existing activity.

Some employers may find that they want to spend more on apprenticeships than their levy allows for. If this is your approach, the government will support and help you meet 90% of the additional costs. You will be asked to make a 10% contribution to the extra cost of training and pay this directly to the government or your chosen apprenticeship training provider.

Discover how employers are planning to make changes to their talent propositions once the Apprenticeship Levy comes into force.

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Apprenticeship programmes you might choose to implement

By the academic year 2017/2018, the majority of apprenticeship frameworks will begin to be replaced by new standards that are created by employers, for employers. A Trailblazer is an employer-led group of organisations who are developing the new apprenticeship standards for occupations in their sectors. Download our Trailblazer Guide for more information on what constitutes an apprenticeship standard including knowledge, skills and behaviours.

With over 450 apprenticeship standards currently approved for delivery or in development across all industry sectors, you will need to scope which programmes for which job families or disciplines in your organisation would add most value if applied to your operating model. This might be either specialist programmes that close identified future skills gaps, or larger scale programmes for high turnover, junior roles to boost retention, or programmes to upskill or reskill your existing staff.

BPP offer standards across a range of disciplines including: accounting and tax, actuarial, digital and technology, financial services, HR, legal and management and business.

Apprenticeships Standards Chart

Operationalising your apprenticeship programmes

Once you have decided how you will capitalise on your Apprenticeship Levy and which standards you will focus on, you will need to consider how you operationalise your programmes across all stages of the apprenticeship lifecycle and adapt your approach for each of the lifecycle stages depending on whether your apprentices are internal recruits (existing staff) or external recruits (new starts).

Apprenticeships Standards Chart

Access a useful checklist of the programme management considerations to help implement your apprenticeship schemes.

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Finding out more about the Apprenticeship Levy

Contact us today to see how you can maximise your Apprenticeship Levy spend and arrange an advisory session with one of our team. We can provide best practice on how you might operationalise your apprenticeship programmes across all stages of the lifecycle including:

  • strategy
  • operating model
  • attraction
  • induction
  • talent management
  • measuring success

BPP partnered with Trendence UK and Group GTI to survey Guardian UK 300 employers on how they are responding to the levy and implementing their resulting apprenticeship programmes. Visit our ‘Levy Research’ page to view the results for market and sector specific best practice on how to deploy and operationalise apprenticeships.

Please view our events calendar to keep up to speed with our most recent events, follow levy updates on our ‘Insight’ page or follow our LinkedIn page.