What’s the apprenticeship levy all about then?

I think its time to find out....

I’ve heard the apprenticeship levy mentioned a lot since I started working for TCHC. There is a lot of information out there and it can be confusing so, I thought I would write a blog post to get to the bottom of it and answer a few questions…

Let’s start with addressing the purpose of the apprenticeship Levy…
It is a new way to fund apprenticeships and reach the government’s apprentice and skills targets. It is paid by companies with a payroll of more than £3 million per annum. The amount they have to pay is 0.5% of their payroll and these funds are set aside in a digital account to be used for apprenticeship training. Companies can use training providers like TCHC for their apprenticeship programme needs, to help them recruit and train their apprentices successfully.

What happens to the money?
All levy payers receive £15,000 in their digital accounts and this must be spent on Apprenticeship training.
If you pay more than £15,000 in levy the remaining amount funds non-levy businesses apprenticeship training.

Does the government make any contributions?
The answer is yes! The government tops up digital accounts by 10%, so for every £1000 that’s contributed to the levy account, the government deposits an extra £100, making the balance of your account £16,500.

What about those companies under the £3 million threshold that don’t have to contribute to the levy programme?
Companies not required to contribute to the Levy can take advantage of apprenticeships by choosing a provider like TCHC on the register of training providers and paying 10% of the cost of the training. The government will pay the rest.

How long do you have to spend the Levy?
Funds stored in the company’s digital levy account will expire after 18 months from when they were made available. This is to encourage businesses to use the funds for the intended purpose each year, instead of letting them build up. Some companies have expressed their disappointment in this and say there’s not enough time to spend their Levy and have called for revision of the system.
What can we expect from the new apprenticeship service?
The government have created a digital service that can be used for selecting, choosing and comparing service providers. At the moment payments are made directly to providers, however by 2020 the government has said it wants to facilitate the payments for training and assessment within its own platform. The apprenticeship programme has faced a lot of criticism since it was launched but the government has maintained it expects to see positive growth in the number of apprenticeships within the next year or two as businesses become more aware of the benefits the apprenticeship programme can offer.

Is there any other funding help out there for training?
Check with your Local Enterprise Partnership (LEP) to see if they have help for training. In some areas there is funding to support small businesses with the 10% payment. They may also be running Skills Support for the Workforce programmes to support your staff with training needs.

The future
The UK will face skills challenges as it leaves the EU so this is a great time to start training and upskilling staff.
It is likely that the Levy system will face some reforms as it goes into its second year. Like all new systems, some people like it and others do not, but it is not going to go away any time soon. Therefore, it make sense if you are a Levy payer to use the money rather than lose it.
I hope that in this post I have been able to simplify things a little and clear up some unanswered questions.
If you would like to know more about taking on an apprentice please get in touch. http://www.tchc.net/

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