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Making sense of the Apprenticeship Levy

Are you an Apprenticeship Levy Payer?

If you’re an employer with a pay bill over £3 million a year, you must pay the apprenticeship levy. You will report and pay your levy to HMRC through the PAYE process. In England, the government will top up the employers’ levy with an extra 10%, paid directly to the employers’ apprenticeship accounts.

What about non-levy-paying employers?

Employers with a pay bill of less than £3 million a year do not pay the levy. The government will pay the apprenticeship training and assessment costs for non-levy-paying employers. Employers will only need to contribute 10% cash towards the cost, which they will pay directly to the provider. The government will cover the rest (up to the maximum agreed funding band).

What is the apprenticeship reward?

From 1st August 2020 until the 31 January 2021, businesses (non levy and levy) taking on new apprentices will be rewarded with £2,000 for a 16 to 24-year-old and £1,500 for a 25 year-old. The apprentice must be a new employee to the business, have a contract of employment start date between 1 August 2020 and 31 January 2021 (inclusive) and must not have been employed by the employer within the six months prior to the contract start date.

This means an employer recruiting a 16-18 year old would receive the £1,000 incentive and the new £2,000 incentive. Claims can start to be made by employers in relation to these apprentices from 1 September 2020. Those claims must be made through the apprenticeship service which you need to register for click here. The payment will be made directly to employers in two equal instalments, where the apprentice is still in learning at day 90 and day 365.

From 1st September the employers will need to register on the online apprenticeship system to be able to claim the new incentive grant payments. You can read all the guidelines here.

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.