Changes to the Apprenticeship Funding System

As many of you may be aware, there have been some changes with regards to apprenticeship funding alongside the implementation of the Apprenticeship Levy.

Apprenticeship Levy Paying Employers – If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017. You can read guidance on how to pay the apprenticeship levy here.

You will report and pay your levy to HMRC through the PAYE process.

The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.

Non-Apprenticeship Levy Employers – a new co-investment rate has been introduced on the 1st May 2017. Co-investment is when employers and government share the cost of training and assessing apprentices.

The chart shows more information below.

If you have any questions regarding the funding or would like a free consultation with Profile in order to better understand your options going forward and what the cost implications may be, please contact us on 01843 609 300 or email enquiries@profiledt.co.uk

Apprenticeship Levy Update

As you know from May 2017, there will be many changes to the way that Apprenticeships are funded. Below is a brief recap with links to more detailed information from the government website …

Levy Paying Employers
From 6th April 2017, all employers in the UK with a staff pay bill over £3m per year will be required to pay the newly introduced Apprenticeship Levy which is 0.5% of their pay bill. All employers have an allowance of £15,000 to offset against levy costs, so no levy will be paid on the first £3 million.

Example: a company has a wage cost of £4 million in a financial year, 0.5% levy is paid on £1 million giving £5000 to the levy fund, this will then be topped up by government by 20%, giving a total levy pot of £6000.
Employers with over 50 employees but under £3m pay bill
For employers with over 50 employees, but a staff pay bill of less than £3m per year, a co-investment of 10% of the cost of the apprenticeship will be required by the employer, with the government then fund the remaining 90% of the cost. This will be introduced from 1st May 2017.
For employers with less than 50 staff and less than £3m annual payroll
For 16-18 year Apprenticeships, no co-investment is required from the employer and there is a £1000 ‘employer’ incentive. For apprentices aged over 19, employer co-investment will be only 10% of the framework/standard value with no upper age limit.
Remember, all employers, levy and non-levy paying, receive a £1000 incentive for 16 -18 year olds. This is split into two payments triggered if the apprentice is still ‘in learning’ after 3 months and then again at 12 months. If a learner is 19-24 and has an educational health care plan, or is a care leaver, the employer is also entitled to incentives.

https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work
Please note: existing apprentices who start before 1st May 2017 will continue under the financial arrangements agreed at the outset of their apprenticeships and will not be affected by the Levy. If you have plans to recruit an apprentice before the 1st May, let the Business Development Team know before the 21st of April and we can arrange for the sign-up.
Standards & Frameworks
As well as the changes to the funding there are also major changes to the way Apprentice qualification are delivered. Where the framework changes to a standard, each standard will be allocated a specific level of funding to cover the total cost of the Apprenticeship, excluding functional skills which will have their own separate level of funding. Frameworks will continue for Apprentices, where there is not a standard available as yet. All Apprentices signed up to post after 1st May, will be subject to the ‘new funding regime’ whether they are on the ‘new standards’ or still on an existing framework.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/562401/Apprenticeship_funding_from_May_2017.pdf

Source: KEITS Newsletter Spring 2017