New Apprenticeship Levy

From May 2017, apprenticeships will be funded differently. The main change will be the introduction of an apprenticeship levy. 

If you are UK employer who pays over £3 million in payroll per year you are automatically classed as a ‘levy paying employer’. This means that you will pay a levy or 'tax' of 0.5% of payroll over £3 million on a monthly basis.

Where to start as a levy paying employer

The levy is for you to use to fund apprenticeship training in your organisation. You can work out how much you will need to pay if you are a levy paying employer here.

Your levy payments will be paid into a digital account which you control. You will need to set up your easy to use digital account before May 2017.

 

We encourage you to use your levy account to pay for apprenticeships in your organisation, rather than letting the payments go and losing money. We have created a simple graphic to show you the steps you can take as an employer through the apprenticeship journey, from setting up your digital account to running the apprenticeships.

 

For these initial months it can be quite overwhelming thinking about what you need to do. That is why we have created a Preparing for the levy checklist for you to download. It takes you through what you need to know and do until May 2017. This way you won't miss anything off! 

 

We understand that there is a more complicated side to the levy and we have outlined the main points below. There is also a powerpoint available for you to download. 

Not a levy payer? Download our non levy payer journey now or visit our apprenticeship funding page

The main points:

The government is proposing that they introduce 15 funding bands for apprenticeship learning.

These bands will set an upper limit on the amount of funding the government will provide. The cost of learning will have to be negotiated by employers with learning providers. Anything agreed above the upper limit will have to be funded by the employer.

The funding bands will be used for both the new standards and the old framework apprenticeships until they are withdrawn. However the funding will not be the same for both systems.

The current proposal for adult social care is that for new standards published for Adult Care Worker and Lead Adult Care Worker the upper limit is set at £3,000 per apprentice. For framework apprenticeships the proposal is that Level 2 Health and Social Care will have an upper limit of £1,500, Level 3 Health and Social Care will be limited to £2,000 (adult social care pathway only) and Level 5 Care Leadership and Management an upper limit of £2,000.

Employers who do not pay the levy will fund apprenticeships through a co-investment model. 

The government is proposing that this will be a 1:9 ratio with the employer contributing 10% of the total negotiated cost of learning and the government co-investing the other 90%.

For employers who take a 16-18 year old apprentice there are additional incentives.

Employers who take on a 16-18 year old and who employ fewer than 50 employees will have 100% of the training costs paid by government. This will also apply where these employers take a 19-24 year old who is leaving care or who has a Local Authority Education, Health and Care plan.

Employers with more than 50 employees who take on a 16-18 year old or a 19-24 year old who is leaving care or who has a Local Authority Education, Health and Care plan will receive an additional £1,000 toward to cost of training support and their learning provider will receive an additional £1,000.

Support for English and maths will be paid by government at a flat rate of £471 per qualification to the learning provider and will not be taken out of the employer’s digital account.

Extra support is also available to the learning provider for support for apprentices with additional learning support needs such as dyslexia, learning difficulties or disabilities.

Employers will be able to offer apprenticeships to individuals who already hold qualifications or other apprenticeships (including at a higher level) as long as the new training allows them to acquire substantive new skills and the content of the training is materially different to any training undertaken previously.

From 2018 employers who pay the levy will be able to transfer up to 10% of the total value of funds to other digital account holders within State Aid rules.

So where do you fit in this system?

  • Levy of 0.5% of payroll less £15,000 allowance payable from May 1st 2017.
  • Government will automatically add an extra 10% to the resulting digital account.
  • Funding for all apprentices up to the upper limit of the standard or framework negotiated with the learning provider taken at 100% from your levy payments.
  • Where levy payments are exhausted then additional apprentices funded on co-investment model of 1:9.
  • £1,000 additional support for apprentices 16-18 years old and those aged 19-24 who are leaving care or who have a Local Authority Education, Health and Care plan plus another £1,000 to your learning provider. The final proposal now includes extra government funding to provide a transitional 20% uplift for providers training 16-18 year olds on a framework. This also applies to 19-24 year olds formerly in care or having an Education and Health Care plan.
  • Levy monies not used expire after 24 months and will be removed from the digital account by government.
  • From 2018 will be able to transfer up to 10% of the value of funds to other digital account holders (including ATAs) within State Aid rules.
  • Government is retaining a simplified version of current system for one year to financially support those from disadvantaged areas whilst reviewing best way to support disadvantaged groups. These payments will not be taken from the digital account.
  • Apprentices paid through the co-investment model. 10% of the negotiated price up to the upper limit to be paid by the employer, the remaining 90% funded by government for apprentices of any age
  • This funding model applicable for both new standards and existing framework apprenticeships to the published upper funding limits set by government.
  • £1,000 additional support for apprentices 16-18 years old and those aged 19-24 who are leaving care or who have a Local Authority Education, Health and Care plan plus another £1,000 for your learning provider. The final proposal now includes extra government funding to provide a transitional 20% uplift for providers training 16-18 year olds on a framework. This also applies to 19-24 year olds formerly in care or having an Education and Health Care plan.
  • From 2018 eligible to receive funds from levy payers within State Aid rules.
  • Government is retaining a simplified version of current system for one year to financially support those from disadvantaged areas whilst reviewing best way to support disadvantaged groups.
  • 100% of training costs met by government for 16-18 year old apprentices and those aged 19-24 who are leaving care or who have a Local Authority Education, Health and Care plan
  • Apprentices outwith these groups are funded on the co-investment model of 1:9 to the value of the upper limit set for the standards or the frameworks
  • £1,000 additional support for apprentices 16-18 years old and those aged 19-24 who are leaving care or who have a Local Authority Education, Health and Care plan plus another £1,000 for your learning provider. The final proposal now includes extra government funding to provide a transitional 20% uplift for providers training 16-18 year olds on a framework. This also applies to 19-24 year olds formerly in care or having an Education and Health Care plan.
  • Government is retaining a simplified version of current system for one year to financially support those from disadvantaged areas whilst reviewing best way to support disadvantaged groups.

If you are an employer likely to be paying the levy from May 2017 or an employer who would like to find out how apprentices can enhance your workforce, we can give you access to more information and support about the apprenticeship levy, commissioning learning provision and using apprentices as part of your workforce strategy. 

To find out more please contact the Information Team on 0113 241 1275 or email information.team@skillsforcare.org.uk and we can talk to you about how our consultancy offer may help.

We also have a presentation which offers a useful summary for you if you are paying the levy

The latest version of the government’s proposals can all be accessed at www.gov.uk/government/collections/apprenticeship-changes  

 

 

 

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