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Apprenticeship Levy

Like all employees, apprentices must still receive a wage. The National Minimum Wage for apprentices is £3.90 per hour. However, as skills develop, many employers tend to increase wages. It is important to remember that there is also an investment and cost linked to the supervision, support and mentoring that you will need to put in place to support the apprentice.

Employers must comply with National Minimum Wage legislation which can be found on the gov.uk website.  You will need to ensure that you pay your apprentices for the time they are at work learning on the job and for off-the-job training, which will include attendance at college. Apprentices aged 19 and over who have spent a year on their apprenticeship must be paid the National Minimum Wage rate appropriate to their age.

In November 2015, an Apprenticeship Levy was announced by Government. This is a mandatory tax for all employers with an annual wage bill that exceeds £3 million.

The Levy came into effect from 1st May 2017. The rate for the levy will be set at 0.5% of an employer’s wage bill where it exceeds £3 million and will be collected via PAYE. The Levy can be used to develop new and existing staff as long as the training meets an approved apprenticeship framework or standard and the individual meets the apprentice eligibility criteria.

If you are a levy paying organisation, you will need to register for a digital account which can be accessed from the gov.uk website.

If your wage bill is below £3 million per annum you will be required to pay a 5% contribution towards the cost of the apprenticeship. The Government will pay the remaining 95%.

There are some exceptions to this where the government recognises employers may require additional support. If you are a non-levy paying organisation with 49 or fewer staff and are recruiting an apprentice aged 16-18 or are looking to appoint an apprentice aged 19-24 with an education and health care plan, including care leavers you will not be required to contribute to the cost of apprenticeship training.

There is also a £1,000 incentive available to support employers when recruiting a 16-18 year old or 19-24 year olds who have an education and health care plan or are a care leaver. These incentives are generated in 2 instalments; one after 90 days and the other after 365 days of the apprenticeship start date.

The table below shows the funding arrangements for the age of apprentice being recruited to the size of organisation and levy paying status.

  Levy Payer

Wage bill more or equal to £3million per annum

Non-levy payer

With more or equal to 50 employees

Non-levy payer

With less than 50 employees

Digital Account

 

Monthly levy = 0.5% of pay bill of £3m and above

 

+10% top up from Government

 

Funds expire after 24 months.

 

up to 25% can be transferred to other employers

(e.g. supply chain)

 

No Digital Account No Digital Account
16-18

 

19-24  care leaver  or with EHCP*

 

Funded by Digital Account

 

Incentives:

£1,000 per apprentice paid in two £500 instalments, at month 3 and month 12

(Via Provider).

 

Government pays 95%, 

Employer pays 5%

(Provider must evidence receipt of 5% contribution before receiving payments from Government).

 

Incentives: 

£1,000 per apprentice paid in two £500 instalments, at month 3 and month 12

(Via Provider).

 

Government pays 100%

 

Incentives:

£1,000 per apprentice paid at month 3 and month 12

(Via Provider).

 

19-24

(excluding 19-24  care leaver  or with EHCP*)

 

Funded by Digital Account

 

Government pays 95%,

Employer pays 5%

(Provider must evidence receipt of 5% contribution before receiving payments from Government).

 

Government pays 95%,

Employer pays 5%

(Provider must evidence receipt of 5% contribution before receiving payments from Government).

 

25+

 

Funded by Digital Account

 

 

 

Government pays 95%, 

Employer pays 5% 

(Provider must evidence receipt of 5% contribution before receiving payments from Government).

 

 

 

Government pays 95%, 

Employer pays 5%

(Provider must evidence receipt of 5% contribution before receiving payments from Government).

 

*EHCP= “Education & Health Care Plan” 


For more information, contact a member of the Business and Employment Support Team:

T: 01229 844836
E: businesssupport@furness.ac.uk


Channelside
Barrow-In-Furness
Cumbria
LA14 2PJ
Rating Lane
Barrow-In-Furness
Cumbria
LA13 9LE
Contact Us Tel: 01229 825 017 (Channelside Campus)
Tel: 01229 828 377 (Barrow Sixth Form College)
Email: info@furness.ac.uk
Business Support Tel: 01229 844 836
Email: businesssupport@furness.ac.uk
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