Is your Trust Apprenticeship Levy ready?

Many employers will have heard of the Apprenticeship Levy by now but may not be aware of what it requires. It comes into effect from 6 April 2017 and will apply to both public and private UK employers across all sectors, including academies.

Paying the Levy

The levy is an annual charge, although it is reported on and paid monthly through usual payroll processing. It is based on the employers’ pay bill.

All employers operating in the UK, with an annual payroll of over £3 million, will be required to pay a 0.5% levy on their monthly pay bill. The employer then deducts the £15,000 annual allowance against the levy liability to calculate their contribution. For example, an employer with an annual pay bill of £5 million will be required to make an annual levy contribution of £10,000. This contribution will then go into the employer’s digital account.

Accessing Funding

The levy is designed to encourage employers to support apprenticeships. Therefore, a decision needs to be made by employers as to whether they would like to access funding. Any funds in digital accounts not utilised within 24 months will expire and be lost.

Funding is available to:

  • All employers who have contributed to the levy. These employers qualify for a 10% government top up on their levy payment within their digital account. See graph below for illustration:






  • Employers who have not contributed (as their pay bill is below £3m) or employers who would like to invest more in training than they have available in their digital accounts will qualify for ‘Co-investment’. Co-investment requires the employer to fund 10% of the cost of the apprenticeship (up to the funding band limit) with the Government paying the remaining 90%.

Additional consideration for academies

Academy trusts will also need to be aware of some added complexities when it comes to the Apprenticeship Levy. For example: Single Academy Trusts (SATs) will be entitled to an allowance of £15,000. However Multi-academy trusts will only have a single annual allowance of £15,000 across all academies and payrolls operating within the Trust. As a result, a MAT with 5 schools, each with a payroll bill of £1million per annum, will be subject to a £10,000 levy charge.

When it comes to using funding, each HMRC approved apprenticeship scheme falls into one of 15 bands. These each have an upper funding limit. These bandings set the maximum amount of funding that can be used in respect of the specific apprenticeship training scheme chosen. Employers will need to cover any excess costs above the band limit separately.

There are a number of educational and teaching based apprenticeship schemes currently in development. Academy trusts should start considering how to maximise their utilisation of the levy to train staff and avoid the charges becoming an additional cost in a time of funding challenges.

For additional information on the Apprenticeship Levy, and what it means for you, please click here to view our factsheet. For further advice, please get in touch with a member of our team on 01903 234094.