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A Guide to the Apprenticeship Levy

The Apprenticeship Levy was introduced in April 2017, considered by some employers to be a 'stealth tax'.  In the first twelve months, levy-paying employers used just 10% of the apprenticeship levy funds.  A recent survey showed that 1 in 5 levy-paying employers writes off its levy payments as a tax on the business.  Once cause for this is cited as a simple lack of information; many employers don't understand the apprenticeship levy and therefore don't know how to make the most of it.

Who pays the Apprenticeship Levy?

The Apprenticeship Levy is paid by any employer with an annual pay roll bill exceeding £3 million.  These employers pay their levy contributions via PAYE systems.

A levy-paying employer can create an account through the digital apprenticeship service (DAS), allowing it to receive levy funds that are paid back into its DAS account so that it can manage payments to training proviers (make, pause or stop payments).

Spending Apprenticeship Levy funds

Apprenticeship Levy funds can be spent on the training and assessment of any apprentice that works in England for at least 50% of their time.  An employer is not able to spend their levy funds on other costs associated with apprenticeships, such as apprentice wages, statutory rights to practise, work placement programmes or the actual setting up of an apprenticeship scheme.

Training and assessment

Employers who can use their levy funds to pay for approved training must select an appropriate training provider who is registered on the Register of Apprenticeship Training Providers (RoATP) and and end point assessment organisation (EPAO).  Employers must agree the cost of training but are only able to use their apprenticeship levy funds up to a funding band maximum for that apprenticeship.  Any additional cost know as 'over-the-cap contributions' must be made by the employer.

Assigning an apprentice

The employer must assign an apprentice; this can be an existing employee or a newly recruited apprentice, and enter into an agreement and set of specific commitments with the training provider.

The digital apprenticeship service (DAS) account

Employers receive their levy funds and manage payments to their training provider(s) for the delivery of apprenticeship training via a DAS account.  Unspent funds in an employer's DAS account will, however, start to disappear after 24 months.  This process is known as 'sunsetting' and works on a first-in, first-out (FIFO) principal.

Reviews and evidencing

It is required that employers conduct regular reviews with their apprentices and are able to evidence that at least 20% all apprentice hours have been spent on 'off-the-job' training.  Tracking and evidencing the 20% off-the-job learning are cited by many employers as one of the largest struggles they have faced since the apprenticeship levy was introduced.

End Point Assessment (EPA)

An End Point Assessment (EPA) is undertaken by the apprentice at the end of their apprenticeship, but only in the instance of standards (which are new apprenticeships).  Under the old frameworks, an EPA is not required.

An apprentice must meet certain pre-defined requirements prior to taking their EPA.  The training provider, employer and apprentice must all be satisfied that the apprentice has obtained the necessary knowledge to pass their apprenticeship, that they can evidence the skills that they have acquired over the duration and that they understand the behaviours required of them.  Only once these requirements have been met may an apprentice complete their End Point Assessment.

If an apprentice fails their EPA, the employer may be liable to incur the full cost of any retakes, which is why it is so important that an employer ensures that the apprentice is prepared, before they take their EPA.  The employer should also understand at the outset, what the financial impact will be if an apprentice fails EPA - in some cases, the training provider may agree to fund an EPA retake.

Training more apprentices than levy funds will allow

If an employer wishes to train more apprentices than their levy funds will cater for, they are required to pay a contribution.  Currently employers pay 10% as a co-contribution with the government meeting the remaining 90% of the costs.  However in a recent announcement in Phillip Hammond's Autumn Budget, the government will be increasing its contribution to 95% with just 5% to be met by employers in an effort to further encourage the take up of apprenticeships.

Transferring levy funds

Employers who pay the apprenticeship levy and have unused funds can support other employers by transferring up to 25% of their annual funds.  Funds can only be used to pay for the training and assessment costs of apprenticeship standards (not frameworks) agreed with the receiving employer who must also be registered on the apprenticeship service.

If you'd like to find out more about Rubitek Core and how it can help you get the most out of your apprenticeship levy and better engage apprentices, employers and training providers to improve apprenticeship outcomes, book a demo or get in touch today




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