What is the Apprenticeship Levy, and how will it affect me?

The Apprenticeship levy is part of the government’s plan to increase the quantity and quality of apprenticeships. It aims to fund three million new apprenticeships in England by 2020.

I’m a small business owner who employs apprentices. Can I afford to keep on doing this with the new levy?

In a word, yes. If a business has a total wage bill of under £3 million, they won’t have to contribute anything to the levy.

What if my wage bill is over £3 million? What then?

The levy is designed to be affordable, and is charged at a rate of 0.5% of your annual pay bill. As every business has a levy allowance of £15,000 a year, you will pay nothing on the first £3 million of your wage bill.

What does the government do with the levy money?

Employers will be able to create an account to access the funds. The government will top up the funds every month by 10%, so for every £1 that an employer contributes to the levy, they will get back £1.10 via their online account.

What can the money be spent on?

The money must be spent on apprenticeship training and assessment, and can only be spent with an approved training provider. Employers can choose from eligible providers and pay for the training on a monthly basis- so you won’t have to stump up the whole amount upfront.

How will I pay for training if I don’t pay the levy?

The cost of apprenticeship training will be paid partly by the employer and partly by the government, in a process known as “co-investment”. While the rate of co-investment is yet to be settled, the government has proposed that they pay 90% and the employer pay the remaining 10%.

How can I find out more?

You can contact our Employer Engagement team by calling 0116 224 2240 who will be able to talk you through your options and explain how Leicester College can support you to find the right apprenticeships for you.