Who pays the levy?
All employers with a UK pay bill of more than £3 million pay a levy at a rate of 0.5% of that pay bill. Levy payers then use a government electronic account called the ‘apprenticeship service’. This contains their levy funds. The only thing that levy funds can be used for is to pay apprenticeship training providers and apprenticeship assessment organisations in England.
The levy is collected through the PAYE process. Each month HMRC calculate the 0.5% of the pay bill, multiply this by the proportion of the employer’s pay bill paid to their workforce living in England and then top up the result by 10%. The resultant levy amount is paid into their apprentice service account. In addition, levy paying employers also receive a £15,000 fixed annual allowance, offset against their levy payment.
There are other detailed arrangements which depend on the nature and status of each employer, so it is vital that your organisation fully understands their liability for levy and the value of the funds they will have in their account before employing their apprentices.
What you can use levy funds for
An ‘apprenticeship standard’ defines what an apprentice in each occupation must achieve in terms of knowledge, skills and behaviours and specifies the minimum number of months the apprenticeship must last. This is accompanied by an ‘end-point assessment (EPA) plan’, which specifies the nature of the assessment of knowledge, skills and behaviours.
Based on these requirements, government has set a unique ‘funding band maximum’ for each standard. This is the maximum amount of levy funding that you can spend on training and assessment of an apprentice against that particular standard.
If the costs of training and assessment go over the funding band maximum, you will need to pay the difference with other funds from your own budget.
You can’t use funds in your account to pay for any of the other costs associated with your apprentices (such as wages, travel and subsistence costs, work placement programmes or the administration of your apprenticeship programme).
Use it or lose it
For those of us in the logistics sector, which is facing a serious talent shortage, apprenticeships could be key to filling skills gaps, whether with existing or new employees.
If you spend all of your funds on apprenticeship training and assessment (or if you are a non-levy paying organisation), there is still help available – the government will contribute 90% to the cost of an apprentice’s training, with your business covering the remaining 10%.
However, if you do not use your allowance, your ‘apprenticeship service’ funds will expire after 24 months, so if you’ve not done so already, it’s important to act now!
Employers with a UK pay bill of less than £3 million don’t pay the levy. Instead, they are able to share the cost of training and assessing their apprentices with government – this is called ‘co-investment’. The co-investment rate changed for new apprenticeships starting on or after 1 April 2019. You will now pay only 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.
Future-proofing your business
The Government established this plan not only to help reduce unemployment and boost the economy, but also to close the skills gap. It aims to help train workers to a high standard, ensuring apprentices have the knowledge, skills and behaviours required to excel within their chosen role.
By utilising your Apprenticeship Levy funds, you can introduce new individuals into your business and set them up for a long career in your company, and our industry. With most courses only taking 12 months to complete, this provides a relatively quick fix now that will help your business for years to come.
Upskilling the logistics sector
Apprenticeships are not just for young people embarking on a new career. They are also an ideal training and qualification opportunity for your existing staff of any age and can help your workforce to bring their skills in line with industry standards – a significant advantage to your organisation. Investment in your people helps you to retain valuable, skilled staff for the future.
If you choose to use the Apprenticeship Levy for training existing staff, there are no shortcuts. Staff members must still complete the apprenticeship over the minimum time set out in the standard and they must complete an end-point assessment (EPA) as per the EPA plan.
End Point Assessment
The EPA can take place only when all training is completed and when you, the employer, consider the apprentice to have achieved the standard.
The EPA must be carried out by an independent organisation – an employer or their training provider cannot carry out an EPA on their own candidates.
Your digital fund can be used to cover costs for apprenticeship training and assessment, so this can be used to pay for EPAs for your apprentices.
RTITB End Point Assessment Service
As a preferred workplace transport training regulatory body, we saw increasing customer demand for us to conduct EPAs. As a result, we developed our RTITB EPA Service and can act as an EPA centre for employers, and training providers with contracts for apprenticeship programmes.
We currently offer EPAs for Supply Chain Warehouse Operatives (ST259) and LGV Drivers (ST0257) but will be increasing our service this year to further support our industry by covering other transport and logistics apprenticeship standards.
Get the most out of the Apprenticeship Levy
Here are five simple steps that will get you up and running so that you can benefit from the Apprenticeship Levy now.
- Find an apprenticeship standard that fits the needs (and required skills) of your business
- Locate a provider from the Register of Apprenticeship Training Providers which can deliver your chosen training. Your allowance only covers training from registered providers – contact us if you need help to find one.
- Choose an End Point Assessment Organisation, such as our independent RTITB EPA Service, which is eligible via the Register of Apprentice Assessment Organisations (RAAO)
- Advertise your apprenticeship vacancies to attract new recruits, or select your existing staff members for the development opportunity
- Enrol and get your apprentice candidates’ training underway!
Let us help you
If you’re an employer looking for help finding the right apprenticeship training provider or need support in conducting your EPAs, we can help. Likewise, if you’re a training provider with apprenticeship contracts, contact us now to discuss our EPA service.
Get in touch with our End Point Assessment Manager Dave Cox on +44(0)1952 520200 or email email@example.com .