Making sense of the Apprenticeship Levy


The way the Government funds Apprenticeships for any business has changed. Some employers will be required to contribute to the new Apprenticeship Levy and others will need to contribute via a co-investment. The Apprenticeship Levy requires all employers operating in the UK with a wage bill over £3million each year to make an investment In Apprenticeships.

Levy paying or co-investment, you’ll want to be sure you’re getting the best training possible for your organisation. At Leicester College, we work with employers to design and deliver training programmes that are perfectly suited to their needs. Whether you’re looking to take on brand new Apprentices, or to develop your in-house training, get in touch to find out how we can help.

Contact us

How does the Levy work?

As an employer with an annual wage bill of more than £3 million, you pay 0.5% of this towards the Apprenticeship Levy through PAYE each month. You have an allowance of £15,000, which reduces the amount you need to pay towards the Levy.

As well as the allowance, the Government tops up your Levy payments by 5% into your Digital Apprenticeship Service (DAS) account.

What incentive do we get as employers?

Employers who take on an Apprentice aged 16-18, or an apprentice aged 19-24 who has previously been in care or who has a Local Authority Education, Health and Care Plan, will receive £1000 to help with any additional training and support costs. The £1000 will be paid to the employer in two equal instalments, at months 3 and 12 of the Apprenticeship.

How do you use the Apprenticeship Levy?

Levy funds are accessed through your Digital Apprenticeship Service (DAS) account. This is where you’ll receive your 5% top up and make payments for training. Companies will lose their funds if they don’t spend it within 24 months. If you are in a group of companies paying the Levy together, your group can collect funds in a single account.

What does transferring Levy funds mean?

The Government currently allows Levy-paying employers to transfer up to 25% of funds entering their DAS account to other employers. You can transfer funds to any employer or Apprenticeship Training Agency. There are many benefits attached to this option, you can:

  • Enhance strategic partnerships
  • Develop the training needs of companies in your supply chain
  • Contribute towards bridging the widening, countrywide skills gap
  • Increase the flexibility of valuable Levy spend

What if you want to spend more than you have in your account?

When you’d like to benefit from more Apprenticeships than your account will currently fund, you’ll move onto ‘co-investment’. This is where the government funds 95% of your Apprenticeship training and assessment costs, and you pay the other 5%.

What can you use the Levy for?

You can use your Levy funds for Apprenticeship training and end-point assessments for Apprentices who work in England for at least 50% of the time. The Levy covers your Apprentice’s training and assessment within the scope of the framework or standard they’re following, and not things like wages and expenses. If the costs of training and assessment exceed the funding band maximum, you will need to pay the difference from your own training budget.

What if you don't need to pay the Levy?

If your annual wage bill is less than £3 million and you’d like to benefit from Apprenticeships in your organisation, you’ll fund this through co-investment. This is where you’ll contribute 5% to the costs of training and assessing your apprentices, and the Government will fund the remaining 95%.

For smaller companies, those with fewer than 50 employees, the Government will pay all of the costs for new Apprentices aged 16 to 18 and those aged 19 to 24 who are leaving care or have a Local Authority and Healthcare Plan.

What Leicester College will do to help you?

The College has a dedicated apprenticeship levy support service for employers. The service allows for employers to focus on maximising their return on investment from the levy.

The Colleges Levy Co-ordination Solution Service offers:

  • Free consultation and support.
  • Support your internal teams to enable them to effectively manage and plan the process.
  • Co-ordination of apprenticeship training.
  • Management of delivering the GCSEs/functional skills requirements of the apprenticeship.
  • Management of the end-point assessment*.
  • Advice on complying with government rules.
  • An e-portfolio/online study platform for apprentices.
  • A stand at jobs/apprenticeship fairs at the College.

For Levy Payers:

  • Up-skilling existing staff
  • Dedicated account manager
  • Information and advice on DAS* system

*Trainer assessor – Staff from the College who will help train and assess your apprentice.

*End-point assessment – a final assessment the apprentice needs to complete.

*DAS System – This is a digital account that you use to pay