The Apprenticeship Levy, a cornerstone of the UK government's initiatives, aims to democratise access to apprenticeship funding across all sectors and business sizes. Businesses contribute to this levy based on their annual wage bill, facilitating an equitable distribution of resources. It's important to note that while all employers are included in the framework, not all are mandated to contribute, ensuring flexibility in funding structures. Understanding the landscape of apprenticeship funding is essential for unlocking growth opportunities for employers.

The Apprenticeship Levy

Levy-paying employers, whose annual wage bill exceeds £3 million, play a pivotal role in sustaining the apprenticeship ecosystem. Mandated to contribute 0.5% of their annual payroll to the Apprenticeship Levy, these funds are collected monthly and pooled into the employer's dedicated Apprenticeship Service account. This account acts as a reservoir for apprenticeship training investments within the organisation.

Additionally, Levy payments offer tax-deductible benefits, enhancing the financial attractiveness of participation. However, it's imperative to manage these funds efficiently, as they come with a 24-month expiration window, after which any unspent funds revert to the government.

Levy transfers: collaborative resource allocation

Recognising the diverse needs of businesses, the government permits Levy-paying organisations to transfer up to 50% of their unspent levy funds to other entities. Termed "Levy transfer," this initiative fosters collaboration and resource-sharing across industries. Employers can initiate transfers through their Apprenticeship Service account, tailoring support based on location, sector, job role, or qualification level. This mechanism not only supports smaller organisations in funding apprenticeships but also fosters a culture of upskilling and collaboration across diverse sectors.

Tailored support for non-Levy employers (SMEs)

Non-Levy employers, typically Small and Medium-sized Enterprises (SMEs) with an annual wage bill under £3 million, can leverage the co-investment model. Under this scheme, the Education and Skills Funding Agency (ESFA) extends substantial funding support for apprentice training costs. The funding percentages vary based on business size:

• Employers with fewer than 50 employees can access 100% funding for apprentices aged 16-18 and 95% funding for those aged 19+.
• Businesses with over 50 employees are eligible for 95% funding for all apprentices.
• Moreover, an enticing £1,000 cash incentive awaits employers hiring apprentices aged 16-18, adding further value to participation.

*The government's decision to fully fund apprenticeships in small businesses from 1st April 2024 is aimed at reducing costs for businesses and providing more opportunities for young people to begin their careers. This initiative will cover the full cost of training for individuals up to the age of 21, thereby easing the financial burden on small businesses and encouraging them to take on apprentices.

Additional financial support

Employers can receive £1,000 to support apprentices in the workplace if they fall into one of the following categories:

• Aged 16 to 18
• Aged 19 to 25 with an Education, Health and Care Plan
• Aged 19 to 25 and formerly in care

This funding aims to alleviate financial burdens associated with apprenticeships and promote inclusivity within the workforce.

Cost considerations

Apprenticeships ensure individuals secure meaningful employment, whilst salaries vary by employer, apprentices must meet minimum wage requirements. Existing employees generally retain their current salaries while undertaking higher or degree apprenticeships.

While Government funding typically covers most expenses, there might be incidental costs associated with specific degree apprenticeship programs. We will provide clarity on any potential expenses before initiating any higher or degree apprenticeship programs with us.

Digital Apprenticeship Service (DAS)

The Digital Apprenticeship Service (DAS) is used by companies to manage their apprenticeship funds. This online platform allows employers to access their dedicated Apprenticeship Service account, where they can allocate funds, select training providers, and monitor the progress of their apprenticeship programs. The DAS streamlines the administration of apprenticeship funding, providing employers with greater control and visibility over their investments.

Find out more about creating your own Digital Apprenticeship Service (DAS) account

Recommended websites for further reading

Whilst the information provided on this page is correct at the time of publication, for the most up-to-date facts and figures we recommend visiting the following websites:

GOV.UK: The official UK government website offers comprehensive information on apprenticeships, including details on funding, how to hire an apprentice, and apprenticeship standards.

National Apprenticeship Service: This website, managed by the UK government, provides guidance and support for both employers and individuals interested in apprenticeships. This service offers guidance on how to use the Digital Apprenticeship Service (DAS), including managing funds, information about the various apprenticeship standards, finding training providers, and recruiting apprentices.

Institute for Apprenticeships and Technical Education: This organisation provides employers with information on apprenticeship standards, assessment plans, and the development of new apprenticeship standards.

Education and Skills Funding Agency (ESFA): The ESFA oversees apprenticeships and provides information on funding rules, eligibility criteria, and funding rates for employers.