The apprenticeship levy is paid by large employers with a pay bill of over £3 million. Currently, only 2% of employers pay the levy, which is set at a rate of 0.5% of their total annual pay bill.
Every employer who pays the levy has a digital account where they can access their levy funds to spend on apprenticeship training. As a Levy employer you will need to register to manage you apprenticeship funds www.gov.uk/guidance/manage-apprenticeship-funds using the Digital Apprenticeship Service (DAS). Add the PAYE schemes that the apprentices will be paid through.
While only the biggest businesses pay the levy, the funding generated by it also funds apprenticeship training for other employers who want to take on apprentices.
If you’re an employer who doesn’t pay the apprenticeship levy, or if you’re a levy-paying employer but don’t have enough funds, you’ll need to pay 5% of the training and assessment costs for your apprentice. The government will cover the rest, up to the funding band maximum.
You’ll make payments directly to the training provider and agree on a payment schedule.
For new starts from 1 April 2024, for employers who do not pay the levy, the government will fully fund apprenticeship training costs, up to the funding band maximum for apprentices who at the start of their apprenticeship training are aged between:
- 16 and 21 years old (or 15 years of age if the apprentice’s 16th birthday is between the last Friday of June and 31 August)
- 22 and 24 years old and: – has either an education, health and care (EHC) plan provided by their local authority and / or has been in the care of their local authority; and – their employer has fewer than 50 employees
For starts before 31 March 2024, for employers who do not pay the levy and have fewer than 50 employees, the government will fully fund apprenticeship training costs, up to the funding band maximum, for apprentices who at the start of their apprenticeship training are aged between:
- 16 and 18 years old (or 15 years of age if the apprentice’s 16th birthday is between the last Friday of June and 31 August); or
- 19 and 24 years old and has either an education, health and care (EHC) plan provided by their local authority and / or has been in the care of their local authority
If you negotiate a price above the funding band maximum, you’ll need to pay the difference between these values.
You’ll need to create an apprenticeship service account to reserve apprenticeship funding. For further information visit our help article or watch our video.
When you have created an account, you can then add the Apprentices’ details and select Achievement Training as the training provider using our “UK Provider reference number 10000099“.
Finish by clicking the ‘save and continue’ followed by ‘approve and send to training provider’. Once the apprentice is registered, Achievement Training will receive an automatic prompt from your digital account.
If you would like to discuss further, please contact David Kellier on 01752 202264.
Employer Incentives For Hiring A New Apprentice
An incentive payment of £1,000 is available to employers hiring an apprentice:
- aged 16 to 18years old
- under 25 with an education, health and care plan or who has been in the care of their local authority
These payments will be paid as follows: 50% will be paid 90 days after the apprentice starts, the remaining 50% will be paid 365 days after the apprentice starts.
National Insurance Contributions
Employers may not need to pay Class 1 National Insurance contributions for an apprentice, if the apprentice is:
- under 25 years old
- on an approved UK government apprenticeship standard or framework (these can differ depending on country)
- earns less than £967 a week (£50,270 a year)
The apprentice, as an employee, will continue to pay Class 1 insurance contributions through their salary, this will only benefit the employer.
Read HMRC’s guidance on paying National Insurance contributions.
Contract of services – Employer agreement
- Employ and pay the Apprentice in accordance with agreed employment terms and conditions and taking into account relevant legislation.
- Provide the Apprentice with an Apprenticeship contract and contract of employment within 13 weeks of their start date.
- Confirm that the Apprentice is employed for a minimum of 30 hours per week.
- Confirm that the intention at the start of the Apprenticeship is that there is available time for the apprentice to have time off to study within the working day, in order to complete the apprenticeship.*
- To provide appropriate supervision to support, encourage and monitor the Apprentice in the workplace including provision of a nominated mentor and deputy to ensure continuity of supervision.
- Confirm that the Apprentice’s job: “allows the Apprentice to gain the wider employment experience required by the apprenticeship standard and that they are able to complete all elements of the apprenticeship within their contracted working hours”.
Please note* All apprentices are required to have 20% off the job training over the course of the Apprenticeship – Please see the Apprenticeship off the-job training guidance.