Use your unspent levy to help close the digital skills gap

The apprenticeship levy was introduced by the government in 2017 to create long-term sustainable funding for apprenticeship training. The levy is paid by large employers with a payroll cost of over £3 million, currently 0.5% of the employer's annual pay bill over £3 million.

The apprenticeship levy helps employers (large and small) to invest in high-quality apprenticeship training and development of their workforce in England. Large employers can use the funds they have paid into the levy, whilst smaller employers must contribute 5% of the cost to cover training and assessment from approved providers.

Employers have 24 months to use their funds in their apprenticeship service account, after this point, the funds expire. However, employers can forecast funds that aren’t going to be utilised and transfer these to help fund the 5% due from for smaller employers.

A levy transfer allows organisations with excess funds to transfer funds to other employers, including smaller businesses within their supply chain. The transferred funds can be used to cover the apprenticeship training and assessment costs for the receiving employer's apprentices to support skills gaps and shortages in specific locations or sectors.

To transfer levy funds, the sending employer paying the apprenticeship levy must be able to forecast if they will have unused funds in their apprenticeship service account.

If you are working with QA as part of our Tech Career Connector programme you will likely be making a ‘Direct Transfer Connection’ (not a generic pledge). QA will help provide the receiving employers account ID so you can start the levy transfer connection:

1. Receiving employer agrees terms (standard, cost and duration) with the transferring employer.
2. Receiving employer sets up an Apprenticeship Service account.
3. Transferring employer connects its Apprenticeship Service account to the receiving employer.
4. Receiving employer selects QA as the training provider to deliver apprenticeship.
5. Transferring employer gives final approval online.
6. The apprenticeship starts and monthly payments are drawn down from the transferring employer.
7. The ESFA have a dedicated YouTube channel with a number of step-by-step guides on how to use The Apprenticeship Service.

Any employer can receive funding to train both new and existing employees eligible for an apprenticeship.  The recipient employer will need to create and set-up an account on the apprenticeship service to link funding with the sending employer.

Transferring employers have a cap on how much can be transferred. This is calculated as 25% of the levy funds declared in the previous tax year (in relation to England salaries). This allowance is re-calculated every tax year (any unused allowance will not be carried forward).

Whilst the allowance is calculated on last year’s levy pot, the transferred funds are deducted from the current year levy pot (in line with any normal draw down).

Transferring employers need to carefully budget their levy transfer commitments when planning their own future apprenticeship training.

There are no direct costs incurred by the transferor, but a small amount of administrative time is required to manage the future commitments and connecting the transfers through the apprenticeship service.

Transferring employers need to ensure they have enough funds to cover the full cost of the training and assessment for any pledges made, especially as programmes will span more than one funding period (1 August – 31 July).

The transferred pledge takes precedence over funding for your own apprentices, if your organisation runs out of levy funds it will fall into what’s known as ‘co-investment’. This means your organisation may need to contribute 5% of any funding shortfall on your own apprentices AND the recipient employer will have to contribute 5% co-investment on the shortfall for their apprentices (you are funding) for the remainder.

Should an apprentice withdraw from their apprenticeship early, you will only pay for the duration the learner is on programme. The ESFA will calculate any amounts due to be refunded to your levy pot.

Once the transfer of levy funds has been processed, the responsibility and liability of the
transfer funded apprenticeship lies solely with the receiving employer.

The funds you transfer should cover the full cost of the apprenticeship (covering both training and assessment, up to the funding band maximum) for the full duration of the apprenticeship.

Outside of the transfer criteria, you cannot impose any conditions on the receiving employer, but you can make sure that you are happy to send funds to the receiving employer through your own due diligence.

The transferor has no accountability for that apprenticeship going forward, apart from the
commitment to fund the apprenticeship over its entire duration until completion.

We encourage the transferor to build a relationship with the receiving employer, sharing knowledge and insights helps ensure learners and the receiving employer get the most out of the apprenticeship.

We value your privacy and treat your information with utmost confidentiality. Here's what we do with your information:

• We will only use the information you provide for the purpose of administering the apprenticeship program and ensuring its smooth operation.
• We may use your contact information to reach out to you for an initial conversation, discuss your apprenticeship requirements, and guide you through the next steps.
• We handle your information in accordance with data protection regulations, ensuring that it is securely stored and processed.

Rest assured that your information will be handled responsibly and in accordance with applicable privacy laws and regulations.

You can find detailed information about the apprenticeship levy, including levy transfers, in the ESFA (Education and Skills Funding Agency) funding rules on the government website 
Apprenticeship funding rules - GOV.UK. The ESFA is responsible for administering the apprenticeship funding in England. Their website and documentation provide comprehensive guidance on the rules and procedures associated with the levy and its various aspects.

If you have any specific queries that aren’t covered in this document, please email TCC@QA.com or contact your QA representative.