Many benefits come alongside employing apprentices for your company, and the apprenticeship levy makes it easy for businesses to do just that. Through apprenticeship schemes, businesses have the opportunity to discover fresh, new talent while at the same time shaping them into skilled members of their team. Not to mention saving on the cost of recruitment and gaining access to government funding.Â
At Big Creative Education, we want the best for apprentices and regularly work with businesses to create leading apprenticeship schemes with significant success rates. Let’s take a look at exactly what the apprenticeship levy can mean for your organisation and how it can help young people the length and breadth of the country.
What is the apprenticeship levy?
The apprenticeship levy was introduced in 2017 by the UK government. It is specifically aimed at employers paying a wage bill of at least £3 million per year.Â
Its purpose is to ultimately improve the quality of apprenticeship training and, in turn, benefit businesses, no matter their size.
The apprenticeship levy offers support to employers by giving them more funds at their disposal to be used in the development of training methods through financial investment.Â
Businesses will have the opportunity to utilise funding for their training program, although because apprenticeship regulations vary throughout the countries of the UK, the levy funds are only for use in England.
Because it’s an English scheme, if you use money from the levy to finance your apprenticeship training, it is mandatory that they do at least 50% of their work in England.Â
Who pays for the apprenticeship levy?
As we previously mentioned, the apprenticeship levy is paid for by companies with a payroll of over three million annually. These employers pay a small amount of tax which can then be reinvested into the workforce through apprenticeship training.
The levy is charged at 0.5% of the yearly pay bill and paid to the HMRC. They collect the funds through PAYE every month, alongside UK taxes and National Insurance.
The money is saved in an apprenticeship service account, and businesses can manage the finances from that account.
The employer pays the apprenticeship levy and declares it at the start of the UK tax year. If the payroll amount changes, the levy charge alters in order to reflect this.Â
When you pay your levy contributions each month, the government adds a 10% contribution along with it.
Any money paid to the levy is to train the apprentice and is not to fund wages. If after 24 months you haven’t used all the stored funds, the HMRC will reclaim them, including the 10% government contribution.Â
The reason for the time limit is to prompt businesses to take advantage of the money available and to use it in the development of their apprentices by investing in training. It’s an incentive to create high-quality apprenticeship programs and opportunities for more people.Â
Whether schools have to pay into the apprenticeship levy depends on the type of school. If you’re an academy with a pay bill that exceeds three million each year, or if you are a community-controlled school, then you are liable to pay. If the payroll is more than three million, voluntary aided schools are also liable.Â
The benefit to the inclusion of schools in the scheme is that it creates a program that trains staff in a way best suited to the school.
How apprentices benefit businesses
The apprenticeship levy means that there is more funding available for apprentices, and because of this, businesses have the opportunity to select individuals to train that genuinely benefit their organisation.Â
Businesses will gain the freedom to select who, when, and how many apprentices they take on.Â
With the funds from the apprenticeship levy, a business can opt to train a brand-new apprentice or, if more beneficial, use the payment to upskill a current employee.Â
Training providers receive the monthly payment until the apprentice either completes the program, or they choose to leave, The best part is that businesses don’t even have to pay into it to benefit.Â
How to access apprenticeship funding
Even if you don’t pay into the apprenticeship levy, you can still receive funding through it. In fact, only 2% of employers pay into the scheme, yet it is an asset to many others.Â
If you’re an employer who pays into the apprenticeship levy, then you access your funding through the online apprenticeship account.Â
If you don’t pay into the apprenticeship levy, however, then you have either the option of co-investment or levy transfer.
What is co-investment?
As the employer, you share the cost of training and assessing apprentices alongside the government. The government pays 95%, leaving the remaining 5% for you to cover. This is available for companies with over fifty employees. Under fifty and the government pays more.
What is the levy transfer?
With a levy transfer, you receive funds from an organisation that has paid into the levy. From the funds that they haven’t used, they can transfer 25% to you to cover the full cost of your apprenticeship training program. The employer paying into the apprenticeship can transfer their unused funds to a company in their supply chain or a connected charity. It can even be used to support a local business.
 Â
How to sign up for the apprenticeship levy
To sign up, just register for an apprenticeship service account on the government website. To do this, you need your email address, the government gateway login for your organisation, and the authority to both add PAYE schemes to the account and to accept an employer agreement.Â
Also, if you don’t pay into the apprenticeship levy, then you need your PAYE scheme reference number.Â
Apprenticeship training
Apprenticeship training is vital for businesses and individuals. It urges businesses to invest in training and gives untold opportunities to thousands of people across the country.Â
When you employ an apprentice, you take a hand in shaping the development of their career and their lives. The apprentice learns on the job, gains practical experience and earns income at the same time.
If you choose to make the most of the apprenticeship levy in the UK, then head on over to Big Creative Education and take a look at how our apprenticeship programs work.
If you’re looking for some creative employees, then you might just find them at the biggest creative college in London.