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How are apprenticeships funded?

Funding varies for each apprenticeship based on the duration of the programme and the rates set by the government. It is possible for 100% of the apprenticeship training costs to be government funded, up to the maximum funding band, if you are a micro employer (employing fewer than 50 employees) or are employing an apprentice with a 16-18 or 19-24 education, health and care plan provided by their local authority or has been in the care of their local authority. If you exceed the funding band maximum, you’ll need to pay all the additional costs.

Levy payers

You can fund an apprenticeship by using the Apprenticeship Levy if your company is a Levy payer.

Non Levy payers

You can get 95% of the programme paid for by the government if your company is a non, or marginal, Levy payer.

Three piles of coins

What is the Apprenticeship Levy?

The apprenticeship levy is a form of taxation designed to help companies offer more apprenticeships. It was introduced to benefit businesses by boosting essential training and developing apprenticeship programmes.

  • It applies to businesses with a payroll over £3million
  • It’s to be used to fund apprenticeship training
  • The levy charge is 0.5% of a businesses total payroll
  • Both public and private employers pay the Levy
  • The Levy is collected monthly via PAYE

What can Levy funds be spent on?

Levy funds can only be used towards the cost of apprenticeship training and End-Point Assessment with an approved training provider. It can't be used towards an apprentice's wages or wider training programme.

How can my organisation spend them?

Levy funds collected by HMRC are found in your Digital Apprenticeship Service (DAS) account. Employers can direct the funds held in these accounts to approved training providers, like Kaplan, to pay for their apprenticeship training

Levy funds expire after 24 months, and return to the government, so it’s important to spend them on apprenticeship training sooner rather than later.

Additional apprenticeship incentives

The government operates a number of schemes to incentivise employers to hire young apprentices.

Employers and training providers could get £1,000 each for taking on an apprentice who is either aged 16 to 18 years old, or aged 19 to 25 years old and has an education, health and care (EHC) plan or has been in the care of their local authority.

For more information about incentive payments, visit the website.

National Insurance

From 6 April 2016, employers may not need to pay Class 1 National Insurance contributions for an apprentice, if the apprentice:

  • is under 25 years old
  • is on an approved UK government apprenticeship standard or framework (these can differ depending on UK country) earns less than £967 a week (£50,270 a year)

For more information about National Insurance contributions, visit the website.

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