There’s a lot of confusion about the apprenticeship levy and what it means for employers.
If you’re an employer, you may be concerned about the impact the apprenticeship levy will have on your business, so we’ve put together an overview of how the system works. Broadly speaking, when it comes to the levy, employers fit into one of three categories:
1. Larger employers
Larger employers are classed as those with a payroll in excess of £3 million, they pay 0.5% of their total pay bill as the levy. All in all, it’s been estimated that around 2% of employers pay the levy.
The levy is collected through the PAYE system, along with income tax and national insurance contributions. However, these employers also receive a 15K allowance from the government – which is taken off the bill and paid in monthly instalments.
Levy-paying employers can claim their levy back in the form of digital vouchers to be used to fund apprenticeships. For those employers paying the levy, but without apprenticeships yet set up, it’s worth looking into how apprenticeships would benefit your business, from better productivity to improved staff retention, to name a few.
Small to medium-sized enterprises (SMEs) are classed as those with more than 50 employees and a payroll of less than £3 million. The funding of apprenticeships for SMEs is organised rather differently, employers pay just 10% to the providers of the training, whilst the Education and Skills Funding Agency typically pay 90% of the costs.
3. Micro SME
A micro SME is an organisation with 49 employees or less, and they receive either 90% or full funding for their apprenticeships. So if you run a small business, the new apprenticeship funding system could provide an opportunity for you to upskill your current employees or to take on new employees.
You can find out more about the apprenticeship levy and the terms and conditions that apply to apprenticeship funding on the government website.
Serving Greater Manchester, Sunderland, Middlesbrough, Darlington and further afield, NGTC delivers training including pre-employment courses, apprenticeships and specialist courses focusing on areas such as hospitality, security and retail. We work closely with our industry partners, including colleges and sporting organisations, to provide training of the highest calibre which stands our students in good stead for a career in their chosen industry. Contact our team today to discuss your training requirements.