EE06-2017

The Apprenticeship Levy:How will it work?

For more information contact our dedicated team:Business Services at Stoke on Trent College01782 603603business@stokecoll.ac.ukwww.stokecollege.ac.uk/employer

Further InformationFurther information on the support available can be found in the Government’sfunding updates or by contacting our Business Services Team who can takeyou through what the changes mean for you and how Stoke on Trent Collegecan help you to make the most of the opportunities it provides.

Tel: 01782 603603Email: business@stokecoll.ac.ukStoke on Trent College, Stoke Road, Shelton, Stoke on Trent, ST4 2DG and Moorland Road, Burslem, Stoke on Trent, ST6 1JJ

Publication date April 2017 – all information correct at time of going to print. Details may change as Government policy develops in this area

What is the Apprenticeship Levy for?Effective April 2017 through the new Apprenticeship Levy, the Government aims to increase the number ofApprenticeship starts to 3 million by 2020.

Will my business pay the Apprenticeship Levy?Do you know if you will have to pay the Apprenticeship Levy and how it will impact your business? Only 1.3%of UK employers will need to pay the Apprenticeship Levy. There will be alternative arrangements for thoseemployers who won’t pay the Levy.

All UK employers who have a total employee pay bill above £3m a year will pay the Levy. This includes publicand private sector, charities and educational providers such as academy groups and universities. The Levy rateis set at 0.5% of any pay bill over £3m per annum.

How will the Government collect the Levy?Payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE),alongside tax and National Insurance.

How much of the Apprenticeship Levy will I pay?Employers get a £15,000 fixed annual allowance to offset against the Levy payment. Please use the followinglink for more information on the direct gov website:

www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work

Here are some examples of how much employers may pay in Levy;

Example 1:Employer of 250 employees, each with a gross salary of £20,000Annual pay bill: 250 x £20,000 = £5,000,000Levy applied: 0.5% x £5,000,000 = £25,000After allowance applied: £25,000-£15,000 means £10,000 Levy payment

Example 2:Employer of 100 employees, each with a gross salary of £20,000Annual pay bill: 100 x £20,000 = £2,000,000Levy applied: 0.5% x £2,000,000 = £10,000After allowance applied: £10,000 – £15,000 means £0 Levy payment

One of the benefits of the scheme is that it places control of Apprenticeship funding into the handsof the employer. This allows you to invest in Apprenticeship training for new and existing staff to helpsecure the future of your business.

What does the Apprenticeship Levy meanfor small employers?If your business has an annual pay bill less than £3m it will not have to pay theLevy, however you will still be able to access funding for Apprenticeships.

Co-funded Apprenticeship TrainingIf you don’t pay the Levy and have over 50 employees, Apprenticeship trainingwill be co-funded. The Government will pay 90% of the negotiated cost ofApprenticeship training and the employer will pay the remaining 10%.

Fully-Funded Apprenticeship Training - Small Company Waiver If you employ less than 50 staff and you train 16-18 year old Apprentices theywill be fully funded.

NB If Apprentices are aged 19+ the co-funded rate applies and you will pay 10%of the negotiated cost.

Can Apprenticeship funding be spent onexisting staff?Yes – a staff member in an existing job role, where the individual needssignificant new knowledge and skills, may undertake an approvedApprenticeship programme.

Funds can only be used towards the costs of Apprenticeship training. Theycannot be used on other associated costs such as Apprentice wages, travel andsubsidiary costs or the costs of setting up an Apprenticeship programme.

What happens to the Levy money once it’spaid?The money collected by HMRC will sit in your digital account which you will beable to use to pay for Apprenticeship training.

For further information, please see the following link via the direct gov website:

www.gov.uk/guidance/pay-apprenticeship-levy

How will I draw down from the Levy fund?Levy paying employers will be able to set up their Digital Accounts on theDigital Apprenticeship Service (DAS), choose the type of Apprenticeship theywant to run, the number of Apprenticeships they take on, all of which can bedelivered through Stoke on Trent College. Once the account is set up Levypayers will access this to make payments to the College.

What will an Apprenticeship cost?For Levy and non-Levy payers, please contact our Business Services Team to discuss costs.

Which provider can we use to deliver the Apprenticeship programme?Stoke on Trent College is an approved provider on the Register of Approved Training Providers (RoATP).

This means we have been through an application process with the ESFA that considers due diligence,capability, quality and financial health to assess our capability to deliver high-quality Apprenticeship training.

Are there any additional payments for Apprenticeships?An employer will receive a payment of £1000 towards the additional cost associated with Apprenticeshiptraining if, at the start of the Apprenticeship, the Apprentice is:• Aged between 16 and 18 years old (or 15 years of age if the Apprentice’s 16th birthday is between the lastFriday of June and 31 August)• Aged between 19 and 24 years old and has either an education, health and care plan provided by the localauthority, or has been in the care of the local authority

Will my Levy fund expire and are there any top ups?The Government will automatically add 10% to the funds in your Apprenticeship service account. They willapply this 10% top-up monthly, at the same time the funds enter your account.

Funds that you don’t use will expire 24 months after they enter your account. Whenever a payment fortraining is taken from your account, the service always uses the funds that entered your account first. YourApprenticeship service account will let you know when funds are due to expire.

Under what circumstances will I have to pay more?You will need to pay more once your business has spent all your Levy contribution and top-up and you want tospend more on Apprenticeship training.

How will the Government fund Apprenticeships which startbefore the Levy is introduced?Apprenticeships which start before the Levy payment (1st May 2017) will continue to be funded for their fullduration under the current funding model. Apprenticeship funding is provided through the Education andSkills Funding Agency (ESFA), and the size of the contribution varies depending on the sector and the age ofthe Apprentice.

The Levy - Our FREE consultation service Stoke on Trent College is perfectly positioned to help you prepare and understand how the newApprenticeship Levy will affect funding for new or existing staff.

Simply call our Business Services Team on 01782 603603 or email us at business@stokecoll.ac.uk