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Understanding The Levy

Understanding The Levy

Understanding The Levy

What is the Apprenticeship Levy?
As part of the Government’s drive to train three million new apprentices by 2020, apprenticeship funding is about to change. From May 1st 2017 the way the government funds apprenticeships in England is changing for all organisations including charities. Some employers with a pay bill of over £3 million each year will be required to contribute to a new Apprenticeship Levy. This new tax will require employers to invest in apprenticeships – with the size of the investment dependent on the size of the business. Large employers with a wage bill of more than £3m each year will pay 0.5% of this figure as an apprenticeship levy – regardless of whether or not they employ apprentices. They will however receive £15,000 to offset the cost of implementing the scheme. Some nursery chains and multiple site settings may qualify for the levy.

From April 2017 there are two types of employers who will benefit from government support towards the cost of apprenticeship training:

• Apprenticeship Levy Payers
• Non Levy Payers

Non Levy Payers

Leap believes that most nurseries, pre-schools, out of school clubs and schools will be Non Levy payers as your annual pay bill will be under £3 million.
Although you wont be paying into the new apprenticeship levy or using new digital apprenticeship service to pay for apprenticeship training and assessment the way apprenticeships are funded will still change for you.

Smaller employers – including childcare settings – too small to be eligible for the levy will be liable for an up-front compulsory cash contribution towards the cost of training and assessing an apprentice if they hire one. The good news is that the Government will pay 90% of the cost, with the employer paying the remaining 10%.

How much will the training of an apprentice cost?
Every individual apprenticeship standard will be allocated to a funding band between £1,500 and £27,000. The upper limit of the funding band will cap the maximum price that government will ‘co-invest’.

What apprenticeships are available for early years providers?
The government will fund 90% of the agreed price for training and assessment, and you as the employer will pay 10%.

The caps awarded for 2017/2018 are:

• Level 2 has been capped at £2000
• Level 3 has been capped at £2500

What additional incentives are available?
The government recognised that smaller employers have historically played a very important role in helping young and disadvantaged people into the workforce for the first time. This is why they are continuing to pay a grant to small employers to support them in taking on new apprentices aged between 16-24 years of age. This is called the Apprenticeship Grant for Employers 16-24.

For small employers (those with fewer than 50 employees) the government will:

• Waive the co-investment for small employers that train 16-18 year old apprentices
• Waive training costs where the apprentice is 19-24 year old care leaver or is 19-24 years of age and has a Local Authority Education, Health & Care Plan.

How do the new Apprenticeships Standards affect the existing Frameworks?
It’s understood that there will be a period where Frameworks will be switched off and replaced by new Apprenticeship Standards, which have been created by employers. However, once an existing apprenticeship Framework is covered by the new Standard, the out-dated Framework will be discontinued at a point which is reasonably practical.

Don’t forget there is no age limit for Apprentices and if you employ an Apprentice aged 16 to 18, you will be exempt from paying the 10% co-investment. Training costs will be covered by the Government providing they are within the funding cap.

Talk to us about employing an Apprentice

We are here to help, guide and support you with anything ‘apprenticeship’ so please feel free to call for a chat and ask as many questions as you want.

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