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Apprenticeship Funding

Employers with a wage bill of more than £3 million need to pay the Apprenticeship Levy.

 

The Apprenticeship Levy requires all employers to pay 0.5% of any wage bill over £3 million into the Government’s new apprenticeship service, to pay for apprenticeship course fees.

 

Employers paying the Apprenticeship Levy will be able to access the funds they have paid for the cost of apprentice training through a new digital account. The Government top-up this amount by an additional 10%.

 

Guidance on employing an apprentice can be found at  https://www.gov.uk/take-on-an-apprentice

 

Selecting an apprenticeship training provider

 

Under the new system, employers will be expected to approach an apprenticeship training provider for apprenticeship training using money available in their digital account.

 

Details of approved training providers for an occupation are available an be found at: https://www.instituteforapprenticeships.org/apprenticeship-standards/

 

Note - the CPA will provide a list of training providers and assessment centres for plant-rleated trailblazers at https://www.cpa.uk.net/trailblazerproviders/ 

 

Employers can select an apprenticeship training provider from the Government’s approved list. They will need to negotiate the cost of delivering the training and sign a contract with the training provider and the apprentice to begin any apprenticeship.

 

Paying for training

 

The Government has set funding bands to determine the maximum employers can spend on each apprenticeship training course through their digital account. Employers will pay in full any amount they agree with the training provider above this maximum level. The new funding bands will vary by apprenticeship occupation and level, but will not vary by age as they do at present.

 

Employers will be entitled to a £1,000 incentive payment for recruiting a 16-18 year old apprentice or 19-24 year old apprentice with an Education, Health and Care (EHC) plan. This will be paid to employers in 2 instalments by their training provider – £500 after 3 months and £500 after 12 months.

 

Funds in employers digital account will expire after 24 months if not used.

 

The changes won’t affect apprentices who started an apprenticeship prior to 1 May 2017. If an apprentice starts a new course after 1 May (e.g. moves from a Level 2 to a Level 3 apprenticeship or starts a new subject area) they will be subject to the new apprenticeship funding rates, through the new digital account.

 

Further more detailed information for employers can be found at: https://www.gov.uk/government/publications/apprenticeship-funding-and-performance-management-rules-2017-to-2018 

 

For employers who do not pay the Apprenticeship Levy

 

If an employer has more than 50 employees but still doesn’t pay the levy, they will pay 10% of the training costs of each apprentice employers take on.

 

If employers are a small employer (fewer than 50 employees) there will be no cost towards training an apprentice who is under 18 or aged 19-24 with an EHC plan, providing the cost of their training is within the maximum funding band.

 

Employers who do not pay the Apprenticeship Levy will be subject to the same apprenticeship funding bands as employers who do.

 

£1,000 is available to any employer taking on a 16-18 year old apprentice, or a 19-24 year old with an EHC plan – the same as for levy paying employers.

 

From 2018, employers will access funding through a new digital account, in the same way as levy paying employers will do from 2017, to pay for the costs of training.

 

Different rules apply to apprenticeship funding in Scotland and Wales, where funding will be accessed in the same way as it is at present.

 

Different rules also apply to groups of companies with the same owner (Connected Companies) and employers should contact HMRC on 0300 200 3200 for more information.

 

How employers can access apprenticeship funding through the new system

 

To access the funds in their new digital account, employers will need to register online with the Skills Funding Agency (SFA) at www.gov.uk/guidance/manage-apprenticeship-funds

 

The SFA will also require employers to estimate the amount of apprenticeship funding they will need from May 2017 onwards.

 

If employers use up all the funds in their digital account, they will need to pay 10% of any additional apprenticeship training costs, with the Government paying the remaining 90%, up to the maximum in the funding band. Contact the SFA at helpdesk@manage-apprenticeships.service.gov.uk  or call 08000 150 600 for further information.

 

How the new apprenticeship funding works

 

Employer Type

Employers pay

Government pays

Incentive payments

Apprenticeship Levy paying employer

The cost of training from the employer’s digital account and 10% of any amount over this, plus any fees over the funding band maximum.

 

90% of any fees that the employer’s digital account will not cover, up to the funding band maximum.

£1,000 for each 16-18 year old apprentice or 19-24 year old with an Education, Health and Care (EHC) plan.

 

Non Apprenticeship Levy paying employer (50+ employees)

 

10% of any apprenticeship training fees, plus any fees over the funding band maximum.

 

 

90% of any apprenticeship training fees, up to the funding band maximum.

 

£1,000 for each 16-18 year old apprentice or 19-24 year old with an EHC plan.

 

Non Apprenticeship

Levy paying employer

(fewer than 50)

 

0% of any apprenticeship training fees for 16-18 year olds or 19-24 year old with an Education, Health Care plan. 10% for other apprentices.

Additionally, employers will pay any fees over the funding band maximum.

 

 

100% of any apprenticeship training fees for 16-18 year olds or 19-24 year old with an Education, Health Care plan. 90% for other apprentices, up to the funding band maximum

 

£1,000 for each 16-18 year old apprentice or 19-24 year old with an EHC plan.

 

 

The Government is giving employers more ownership of apprenticeship training

 

Employers who wish to deliver their own apprenticeship training can find out more about becoming an employer-provider here: www.gov.uk/government/publications/apprenticeships-become-a-training-provider

 

The Government is also encouraging employers to develop new apprenticeship standards to better meet industry training needs. The CPA are providing administrative and technical support to number of trailblazer groups. Employers wishing to be involved with trailblazer development groups can make a request via trailblazers@cpa.uk.net  

 

The Government Apprenticeship Levy and the CITB Levy are not the same

 

The Government Apprenticeship Levy is only designed to cover apprenticeship training fees. The CITB Levy is used to support construction employers to make sure industry has the skilled workforce it needs. This includes the apprenticeship grants that support employers with the additional costs of employing an apprentice in construction. The CITB Levy will cover these additional apprenticeship costs, as well as supporting a wide range of other benefits to construction employers, such as:

 

  • Grants to support and encourage training
  • Promoting construction as career of choice and encouraging more people to enter the industry
  • Research to identify future skills needs
  • Developing standards and qualifications to qualify the industry and keep employees safe

 

Further apprenticeship funding reforms in 2018

 

Employers cannot transfer funds to an Apprenticeship Training Agency (ATA) or sub-contractor. However, the Government has committed to allowing employers to transfer up to 10% of the annual funds entering their accounts to other employers or ATAs in 2018.

 

This information was sourced from CITB in April 2017. A leaflet containing the above information can be downloaded here

 

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