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The Apprenticeship Levy & other apprenticeship funding options

What is the apprenticeship levy?

Introduced in April 2017, the apprenticeship levy is a Government initiative to fund apprenticeships. The Government committed to 3 million apprenticeship starts in England by 2020. So, the levy was created to fund this. Their goal? To encourage more people to hire apprentices – and help reduce skills gaps in the UK.

Who pays the apprenticeship levy?

Employers in England with an annual wage bill in excess of £3million per annum will pay 0.5% of that wage bill into a closed levy account that they will only be able to spend on apprenticeships.

How is it paid?

Funds will be taken in month – and available to spend in the following. All payments will be ‘one month in arrears’. Employers will receive a 10% top up to monthly funds entering their Apprenticeship Service account.

Does it expire?

Funds will expire after 24 months unless they are spent on apprenticeship training. This will also apply to any top-ups in the account.

What if I’ve used all the funds in our apprenticeship levy?

If you have used all funds available in your apprenticeship levy, the 5% contribution (outlined below) will apply, requiring you to pay 5% of the total cost of any additional apprenticeships.

How can our apprenticeship be funded if we don’t pay the apprenticeship levy?

Employers that do not accrue their own levy funds still have access to funding in England but in a different way. Employers are required to cover 5% of the negotiated price of delivery directly to the training provider. This is often paid in single up-front payment. Remaining delivery costs are paid in the same way direct to the training provider as applicable. There is no recourse to attain a refund, in total or part, of an employer co-investment contribution. Non-levy organisations can still register to use the Apprenticeship Service accounts and are being encouraged to do so. On the AS account employers are able to reserve funds (for up to 10) future apprentices (reserved funds expire after 3 months and are still subject to the 5% employer co-investment).

Additional contributions for SMEs

If you’re an employer with less than 50 employees (for at least 365 days prior to the apprentices starting) the Government will fund the total cost of the apprenticeship for 16-18 year olds (and 19-44 year olds with an EHC plan).

Bonus Government Apprenticeship Incentive Scheme

In March 2021, the Government announced an extension to the July 2020 new apprenticeship bonus scheme for employers who hire a new apprentice as a solution to bridging their tech skills gaps. This support for employers were extended until 31 January 2022. Read more about the apprenticeship incentive grant.

Apprenticeship funding in Scotland

Apprentices aged 16-19 years

100% funded by the Scottish Government (via SDS).

Apprentices aged 16-19 years

Apprentices aged 20-24 years

Partially funded by the Scottish Government (via SDS).

Apprentices aged 20-24 years

Still not sure how funding works?

No problem. If you want to know the ins and outs, let’s go through it together. Contact us.

Still not sure how funding works?

If you have any questions on funding apprenticeships, please contact us using the form below.

Partnering with you to power potential

We can work together to help recruit tech and digital apprentices or help reskill your existing workforce and provide your business with the in-demand tech skills you need.

Get in touch with us. Our team will respond within 24 hours.