Apprenticeship Funding Systems
Funding for Apprenticeships
Funding for Apprenticeships is available to learning providers from the Skills Funding Agency.
How much is available depends on several factors, including the level of Apprenticeship programme you are running and the age of your apprentices.
Find out more about what funding is available to learning providers.
Our Workforce Development Fund (WDF) can be used by employers to help fund the delivery of Apprenticeships in adult social care.
Funding for Intermediate and Advanced Apprenticeships
Funding for Higher Apprenticeships
Zero hour contracts
Zero hour contracts will be accepted for Apprenticeships.
Find out more on the 2015-16 funding and the conditions on zero hours contracts (see paragraph 279 on page 69).
The new 2016-17 funding guidance is also available (paragraph B18 on page 4)
Changes to Apprenticeship funding
Apprenticeship funding is going through changes. This is a result of government policy and the introduction of the new Apprenticeship standards.
There are likely to be three different systems in the next few years. The reasons behind this are outlined in the Comprehensive Spending Review Blue Book and in the Department of Business Innovation and Skills/Department for Education’s Apprenticeship Vision 2020 document.
Certain actions have been taken in regards to these three funding systems:
An overview of the three systems:
Current SASE framework Apprenticeships
- If you’re signed up to a framework, the funding system remains as is and will stay in this model for the duration of the Apprenticeship. This will continue to apply so long as starts are permitted on a particular framework.
- Frameworks will be withdrawn gradually once equivalent standards have been signed off by ministers.
- The Age Grant for Employers (AGE) will be extended to July 2017.
- From April 2016, employers will no longer need to pay National Insurance contributions for apprentices under 25.
New standards 2015-16
- Starts in 2015-16 on new Standards are funded using the 1:2 model. This is where the employer must contribute one-third of the agreed price of the Apprenticeship (training and end assessment) which triggers a two-thirds payment by the Skills Funding Agency (SFA). “In kind” payments are not permissible in this arrangement.
- The actual price is negotiable between the employer and lead learning provider. SFA will have assigned each standard to one of six funding caps. SFA will pay two-thirds of that cap price. These are the maximums which can be charged and a lower price can be negotiated as can the payment schedule to the learning provider.
- Additionally there are fixed price incentive payments for each of the six bands which give extra cash back for those with fewer than 50 employees, those taking on 16-18 year olds and upon completion.
Apprenticeship Levy – the principles
On 12 August 2016, the government published updated information about the Apprenticeship Levy proposal
- The levy was announced in the government’s Comprehensive Spending Review in November 2015. The government intends to introduce it from 1 May 2017
- The levy is a 0.5% tax on an annual payroll bill for every company but only for the amount of that payroll which is over £3m.
- This applies to all employers with PAYE arrangements including the public sector. It is expected that this will only apply to 2% of employers.
- This will only apply to Apprenticeships starting from the 2017-18 financial year.
- The money raised will go into that employer’s Digital Apprenticeship Service (DAS) Account to pay for their apprentices. The DAS is currently under development by the government.
- The 98% who don’t pay the levy will get funding as part of a “co-financing” arrangement. The latest proposal is that this should change from the current ratio of 1+2 to a new ratio of 1+9. This means the employer pays 10% of the cost of training and this will trigger the payment of the remaining 90% by the Skills Funding Agency. 20% of the overall price will be held back until the end to ensure enough is retained for the paying of the end-point assessor
- The 98% who don’t pay the levy will not have DAS accounts until at least April 2018.
- The levy payers will have 18 months to use what’s in their digital account. Because the levy is collected on a monthly basis via the PAYE system, money is taken out from the earliest contribution to prevent it being clawed back.
- The levy can only be used to fund Apprenticeships, not any other form of training.
- It can only be used for an employer’s English-based employees (they will check the employee’s work and home addresses).
- Companies can pool their levy payments into a group account BUT the £15k allowance will only count once.
- Levy payment to HMRC will be “allowable for Corporation Tax”.
- Employers can be learning providers so long as they are registered as such.
- All public bodies with more than 250 employees will be required to take on 2.3% of their staff as apprentices.
For more of the latest detail, go to our Apprenticeship Levy page