CIPP quick poll on Apprenticeship Levy

30 June 2016

To help us understand awareness and readiness, please take a moment to complete our CIPP Poll on our home page (bottom right) which asks:

England, Scotland, Wales and Northern Ireland have individual apprenticeship authorities affecting the introduction of the Apprenticeship Levy in 2017; do you have employees in more than one nation?

Background to the Apprenticeship Levy

The levy will apply to all UK employers in both the private and public sectors.

It is payable on annual pay bills of more than £3 million. Employers with an annual pay bill of less than £3 million will not pay the levy. These employers will continue to have access to government funding to support apprenticeships.

The levy will be charged at a rate of 0.5% of an employer’s pay bill. Levy payments will be collected monthly by HMRC through Pay as You Earn (PAYE), payable alongside tax and National Insurance. Pay bill will be based on total employee earnings subject to Class 1 secondary National Insurance contributions (NICs).

There will be a £15,000 fixed annual allowance for employers to offset against their levy payment. A connected person rule, similar to the one used for the Employment Allowance, will mean that employers who operated multiple payrolls will only be able to claim one allowance for the levy.

Individual employers’ funding for apprenticeship training in England will be made available to them via a new Digital Apprenticeship Service (DAS) account. Employers will be able to use this to pay for training for apprentices. The service will also support employers to identify a training provider, choose an apprenticeship training course and find a candidate.

Employers will be able to use their funding (up to a cap which will depend upon the standard or framework that is being trained against) to cover the cost of an apprentice’s training, assessment and certification.

The levy will put apprenticeship funding in the hands of employers and will encourage employers to invest in their apprentices and take on more. Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay in to the levy through a top up to their digital accounts.

The government will apply a 10% top-up to monthly funds entering levy paying employers digital accounts, for apprenticeship training in England, from April 2017. All funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value.

Operational guidance for employers

Information on the operating model of the apprenticeship levy has been published which will help employers understand how the levy will operate from April 2017 and how funding for apprenticeship training in England will be accessed by all employers, whether they pay the levy or not.

Publication of the guidance Apprenticeship levy: how it will work is intended to be operational: something that employers can refer to and use to prepare ahead of the levy implementation in April 2017.

  • Key areas of the guidance are:
  • Paying the apprenticeship levy
  • What happens to the money once it is paid to HMRC
  • Buying apprenticeship training
  • What apprenticeship funding is available
  • Eligibility for training
  • Preparing for the introduction of the apprenticeship levy.

Accessing money paid under the apprenticeship levy

Once you have paid the levy to HMRC you will be able to access funding for apprenticeships through a new digital apprenticeship service account. You will be able to use this to pay for training and assessment for apprentices in England. The service will also help you find training providers to help you develop and deliver your apprenticeship programme. Separate arrangements will be in place in Scotland, Wales and Northern Ireland.

Employers who operate in England and other parts of the UK

The levy will apply to all UK employers in both the private and public sectors.

The amount entering your digital apprenticeship service account will be how much you have available to spend on apprenticeship training in England.

Apprenticeships are a devolved policy, which means that authorities in each of the UK nations manage their own apprenticeship programmes, including how funding is spent on apprenticeship training.

The digital apprenticeship service will support the English apprenticeship system. Scotland, Wales and Northern Ireland have their own arrangements for supporting employers to access apprenticeships.

If you’re an employer with operations in Scotland, Wales or Northern Ireland, you may also want to contact their apprenticeship authority:

To calculate how much you will have to spend through the English system, HMRC plan to use data that they already hold about the home address of your employees. They will use this data to work out what proportion of your pay bill is paid to employees living in England. This assessment will take place in early 2017; HMRC will announce the exact date in advance.

Employers can update their employees address as part of their Real Time Information returns. HMRC is testing the accuracy and suitability of this approach and will provide more details in October 2016.

CIPP comment

There are still many details being worked through with the Apprenticeship Levy. The CIPP Policy Team continue to be involved in consultation and will update members and the profession as soon as we have further information.