The Apprenticeship Levy: 10 Frequently Asked Questions (and the answers!)

Hello from London!

The apprenticeship levy can be difficult to navigate. Here's a handy set of frequently asked questions that I get asked A LOT and the answers to each question for you.

1. What is the Apprenticeship Levy?

The Apprenticeship Levy is a UK government initiative introduced in April 2017 to fund apprenticeships. It requires large employers (with a payroll of over ￡3 million) to contribute 0.5% of their annual pay bill into a digital account, which can then be used to fund apprenticeship training.

2. Who has to pay the Apprenticeship Levy?

Employers with a payroll of over ￡3 million per year are required to pay the levy. This applies to businesses across all sectors in the UK.

3. What can Apprenticeship Levy funds be used for?

Levy funds can only be used to pay for apprenticeship training and assessment with an approved provider. They can be used to upskill existing members of staff or new staff members in courses ranging from level 2 (GCSE) to level 7 (Masters equivalent). They cannot be used for wages, recruitment costs, or other associated expenses.

4. What happens if a company doesn’t use its levy funds?

Levy funds expire after 24 months if not used. Any unspent funds are reallocated by the government to support other apprenticeship training initiatives.

5. What if a company’s levy funds don’t cover the full cost of an apprenticeship?

If a company spends all its levy funds, the government will cover 95% of the cost of additional apprenticeship training, with the employer contributing 5%.

6. Do smaller businesses (non-levy payers) have to pay?

No, businesses below the ￡3 million payroll threshold do not pay the levy. However, they can still access 95% government funding for apprenticeships, with just a 5% employer contribution.

7. Can levy-paying businesses transfer their funds?

Yes! Levy-paying employers can transfer up to 25% of their unused funds to other businesses, including smaller firms in their supply chain or charitable organisations, to support apprenticeship training. (Coventry University group is one of the many organisations currently gifting it's apprenticeship levy.)

8. How do businesses access their levy funds?

Levy-paying employers manage their funds through the Apprenticeship Service Account (ASA) on the gov.uk website. From there, they can allocate funds, choose training providers, and track their spending.

9. How much does apprenticeship training cost for SMEs?

For most SMEs, the government covers 95% of the cost of apprenticeship training. Your business only needs to contribute 5%, making apprenticeships a highly cost-effective way to develop talent.

10. How can businesses make the most of their Apprenticeship Levy?

To maximise value, businesses should:

? Identify skills gaps and invest in relevant apprenticeships.

? Upskill existing employees to boost retention and productivity

? Partner with accredited training providers for high-quality programmes

? Consider transferring unused funds to strengthen their supply chain

Do you have any questions to add to this list?

If so, drop a comment below or message me on WhatsApp: ??07392 097234