Funding Levy

If your organisation is a Levy payer, then the cost of the apprenticeship will be taken from this fund. This is known as the “Employer Digital Account” of which you as an employer, has access to so that you can determine how much funds you have and what you have used to date. Remember, the Levy fund is only for Apprenticeship training and cannot be used for any other kind of training.

The government will pay an additional 10% top up into your apprenticeship digital account so that you can use this for apprenticeship training. However, regardless of how much you have in this account, these funds will expire 24 months after they enter your account unless you spend them on apprenticeship training.

You will be able to use your levy funds (up to 25%) to pay for the training of apprentices with other employers, perhaps in your supply chain.

Once the training you have agreed has started, monthly payments will be automatically taken from your digital account to pay the training provider. You will have access to your digital account to check what funds have been paid in and out.

Where you want to arrange apprenticeship training that exceeds the funds in your account, the government will support 95% of the price agreed (up to a maximum funding band limit) and will pay this directly to the training provider (monthly).  You will need to pay the training provider for your 5% co-investment.

We will be happy to explain this in more detail should you wish to make an enquiry and our team at Milltech will be happy to help you.

If your organisation is not a Levy payer, then the government will provide 95% funding towards the total cost of the apprenticeship training. The Co-Investment is the 5% difference that would be paid by the employer.

If you are a small employer with less than 49 employees and you employ an apprentice aged 16 – 18 years old, then the government will fund 100% of your apprenticeship training with zero cost to the employer other than the apprentice salary/wage.

The government will also pay you £1000 for each 16-18 year old you enrol on an apprenticeship (paid in 2 stages).  This is to recognise the additional costs/support that may be required when recruiting a young person. This is paid irrespective of the size of the company.

If you are a Levy Payer and your fund does not cover the full cost of the apprenticeship, then the government will fund 95% of the agreed price of the apprenticeship training. You will still need to pay the 5% Co-Investment; however, the remainder will be funded.

The apprenticeship levy was introduced in 2017 as a government scheme to fund apprenticeships. Apprenticeship levy rules state that employers with a payroll of more than £3 million must pay a 0.5% levy on their total payroll, offset by a £15,000 government allowance. The levy is paid monthly through PAYE alongside income tax and national insurance contributions.

Levy contributions appear in a digital account which can be used by the employer to arrange and pay for apprenticeship training. The funds can only be spent on apprenticeship training or End-point Assessment according to apprenticeship levy rules.

After 24 months any unused levy funds expire and return to the government.

Non levy-paying employers can pay 5% of the apprenticeship course cost, and the government will cover the remaining 95% through the process of ‘co-investment’.

If your payroll is more than £3 million, you’re already invested in the levy.

The apprenticeship levy can only be used within England, as apprenticeship legislation differs across the devolved nations. For this reason, apprentices funded by the levy must work at last 50% of their time within England. The amount of levy you can access is directly linked to the proportion of your employees living in England.

Unlevied employers can use the levy through a transfer of funds from a levy paying employer. Employers can transfer up to 25% of their annual levy fund to another business, for example a company in its supply chain.

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