Funding

Funding

The introduction of an apprenticeship levy has radically changed the legal sector’s view of apprenticeships. Employers who are now paying the apprenticeship levy need to ensure that they are gaining benefit from these payments for their organisations.

How it works

Organisations with a pay bill over £3 million are required to pay an apprenticeship levy.

Organisations with a pay bill below this threshold are eligible for government funding of 90% (the government has announced that this will rise to 95% in 2019) or 100% depending on their size.

The government has allocated a training value to each approved apprenticeship programme. This is referred to as the ‘capped cost’ and is relevant for both schemes.

Please select from the options below to find out the funding arrangements for your organisation.

Organisations pay 0.5% of their pay bill, less an annual allowance of up to £15,000, in monthly payments using the PAYE system. These funds then become available through an Apprenticeship Service account and can be spent on training. The funds can only be used for apprenticeship training and end-point assessment, up to the capped cost, not on the other associated costs of setting up or running an apprenticeship programme.

How does it work?

Once the annual pay bill and levy payment has been estimated, the monthly amount available to employers is calculated. For example, using annual pay bill of £5 million:

  • Step 1. Calculate 0.5% of estimated annual pay bill: £5,000,000 x 0.5% = £25,000
  • Step 2. Deduct £15,000 annual allowance: £25,000 – £15,000 = £10,000
  • Step 3. Divide by 12 and round down* to nearest pound to calculate monthly amount payable through PAYE system: £10,000 ÷ 12 = £833.33. Round down to £833
  • Step 4. Add 10% government top-up and round up* to nearest pound: £833 + £83.30 = £916.30. Round up to £917
  • Step 5. Monthly amount available to the employer through the Apprenticeship Service account: £917

Payments for training can be drawn down during the period of the apprenticeship, with 20% of the capped cost being withheld for the end-point assessment.

How long do the funds last?

The funds in your digital account – plus the 10% government top-up – expire after 24 months. This is on a rolling basis.

What if the amount in my Apprenticeship Service account isn’t enough to cover costs?

If you use up the funds in your Apprenticeship Service account, you can apply for government funding for further apprenticeship training under the co-funding model (10% paid by the employer and 90% paid by government) up to the value of the capped cost for each apprenticeship.

What can the Apprenticeship Service be used for?

You will use your Apprenticeship Service account to:

  • Select the apprenticeship programme
  • Choose your training provider and set training price
  • Manage payments for training and assessment
  • Post vacancies

Apprenticeships in other areas

Make sure you use up as much of your levy payments as you can by considering apprenticeships in other business areas such as HR, business support and data input. Through our alliance with Kaplan and Arch Apprentices we can offer our clients a wide range of programmes.

If your pay bill is less than £3 million you are eligible for government funding for apprenticeship training and you are not required to pay the apprenticeship levy.

The government will co-invest in your apprenticeship training:

  • Employers pay a 10% contribution towards the cost of training (government has announced that this will be reduced to 5% in 2019)
  • Government pays the remaining 90% up to the capped cost for each apprenticeship

This funding is only available for the cost of the apprenticeship training and end-point assessment.

If your pay bill is less than £3 million you are eligible for government funding for apprenticeship training and you are not required to pay the apprenticeship levy.

The government will co-invest in your apprenticeship training:

  • Employers pay a 10% contribution towards the cost of training (government has announced that this will be reduced to 5% in 2019)
  • Government pays the remaining 90% up to the capped cost for each apprenticeship

This funding is only available for the cost of the apprenticeship training and end-point assessment.

Additional incentive

Organisations with fewer than 50 employees who employ an apprentice have 100% of training and assessment costs paid by the government up to the capped amount where the apprentice is 16-18 years old.

An incentive payment of £1,000 is currently payable to any organisation taking on an apprentice aged 16-18 years. This is a direct payment to the employer and does not go through the Apprenticeship Service Account.

Please note that government funding rules can change.