Apprenticeship Levy

Who pays the Apprenticeship Levy?

The Apprenticeship Levy applies to both public and private UK employers across all sectors with an annual payroll of more than £3m 

What is included in my payroll?

Your payroll is based on the total amount of earnings subject to Class 1 secondary NICs. Earnings include any remuneration coming from employment, such as wages, bonuses, commissions and pension contributions that you pay NICs on but not benefits in kind. 

How much is the Apprenticeship Levy?

The Apprenticeship Levy is set at 0.5% of your total payroll and is collected monthly via PAYE. There is a £15,000 fixed annual allowance that employers can offset against their levy payments.

The levy allowance operates on a monthly basis and accumulates over the year. This means you have an allowance of £1,250 a month. Any unused allowance is carried over from one month to the next.

EXAMPLE: Calculating what you have to pay

An employer with an annual wage bill of £5m

Levy sum: 0.5% of £5,000,000 = £25,000

Offset allowance of £15,000 (£25,000-£15,000) = £10,000

Annual levy payment = £10,000 (£833.33 per month)

What if we are a group of companies?

Where a group of employers are connected you can only use one £15,000 allowance. Therefore, you must decide what proportion of the levy allowance each employer in the group will be entitled to.   We can help you decide how to do this.

How much does the Government top up our levy pot?

Employers that pay the levy in England receive a 10% top-up from government. It means that for every £1 you contribute, you actually receive £1.10. 

Are apprenticeships affordable?

Payments are spread across the entire lifetime of the Apprenticeship – taken each month by your training provider. This means that you don’t have to meet the full cost of the Apprenticeship at the start of the training.

You just need enough funds in your account to meet the monthly payments. In addition, 20% of the cost of the Apprenticeship will be held back and taken from your Digital Apprenticeship Service (DAS) online account at the end of the Apprenticeship.

Do levy funds run out?

Yes. Levy funds will expire 24 months after they enter your digital account unless you spend them on Apprenticeship training. For example, funds that entered your account in July 2020 will expire in July 2022.

If you don’t use them, you will lose them.

The account works on a first-in, first-out basis. Whenever a payment is taken from your digital account it automatically uses the funds that entered your account first. 

What can the Apprenticeship levy be used for?

Levy funds can pay for Apprenticeship training and assessment. This must be with an approved training provider (such as Alchemist Consultants) and a registered end-point assessment organisation.

They cannot pay for Apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships or the costs of setting up an Apprenticeship programme.

Can the levy be used to train existing employees?

Apprenticeships can be offered to new or current staff of all ages and at any level. Older staff, even those with degrees, can follow an Apprenticeship if they are taking on new roles or require new knowledge and skills. 

What happens if my levy pot doesnt cover full cost of training?

If an employer pays the Apprenticeship Levy but their funds don’t cover the full cost of the Apprenticeship training they would like to buy, then additional support is available.

The government will pay 95% of the additional costs (up to the maximum of the relevant funding band) - with you as the employer ‘co-investing’ 5%.

What if the employee needs support with maths and English?

If you employ an Apprentice who needs extra help with English and maths, additional payments are made to your training provider. This does not come out of your Apprenticeship Levy funds. 

Alchemists ‘Learning and Development’ programmes address skills, behaviours, attitudes and competencies. 

The primary  aim of all of our 'Learning and Development Programmes'  is to enable deployment that really engages people to achieve results. Our learning approach is one of ‘learning by doing ‘, where we not only teach the theory, we also maximise our hands on practical methods that can be immediately applied to the workplace resulting in demonstrable return on investment. 

We currently deliver apprenticeship standards in Team Leader/Supervisor Level 3 and Operational/Departmental Level 5.  Our future curriculum development is focussed on the Process Leader Level 5 and Improvement Practitioner Level 4 standards.

Coaching is a core component of our delivery and this extends to participants increasing their own use of coaching and mentoring in the workplace.