Apprenticeship levy, the story so far

From 6 April 2017, the apprenticeship levy comes into effect.

It will apply to all employers in the UK and it is intended to promote and increase the number of apprentices in the workplace.


Though successive governments have promoted the apprenticeship scheme as a way of developing the skills and training of young people, the actual number of apprentices has declined since 1995. To reverse this trend the UK government has set the goal of three million more apprentices by the end of this parliament.

This is an ambitious goal and how the Government hopes to achieve and fund it follows.


The government has based the funding on two tenets that will, in their eyes, enable the increase in apprenticeships.

First, by giving the organisations direct access to the money spent on apprenticeships the employer ‘owns’ the apprenticeship and will look for high quality training.

Second, by adding to the amount of funds the employer has access to, the government ensures that the employer will receive more than they put in, and use the funds accordingly.

Funding methods for levy payers and non-levy payers

Funding for the extra apprentices will be through the apprenticeship levy. This is currently set at 0.5% of the employer’s total pay bill which includes earnings below the LEL (lower earnings level). There is a levy allowance of £15,000 that is intended to prevent employers with a pay bill of less than £3,000,000 paying anything. Most employers will find that they do not have to pay the levy.

As apprenticeships come under skills and training, how the apprenticeship levy is administered in the UK is down to each devolved government.

The UK government is directly responsible for funding apprenticeships in England. Responsibility for apprenticeship funding in the other three nations of the UK falls to the Scottish Government, the Welsh Assembly and the Northern Ireland Assembly.

Outlined below are the ways each nation accesses apprenticeship funding.

Levy payers


  • Once the apprenticeship levy is introduced in April 2017 the employer will have a percentage of the levy amount paid directly to their digital apprenticeship service account by the end of the month of payment.
  • Government will add 10% of the value of the funds each month.
  • To spend the funds the employer must access the Digital Apprenticeship Service to get the list of approved training providers and assessment organisations (for the end point assessment).
  • Digital accounts can be created from January 2017 using the employer Government Gateway ID, their PAYE scheme details and their Companies House number or equivalent.
  • Employer and training provider will agree a cost and payment plan to suit.
  • Funds will expire after 24 months.


  • The main relationship is between the training provider and Skills Development Scotland.
  • Funding is paid directly to the training provider who organises and delivers the training.
  • The training provider also helps employers find new apprentices by posting vacancies on various websites.
  • At present, there are no plans for an employer controlled digital account.


  • The Welsh Assembly gathers information from employers on current skills needs and gaps.
  • The information is used to determine the apprenticeships needed, and training providers are engaged to deliver the qualifications.
  • The Welsh Assembly is committed to providing a minimum of 100,000 apprenticeships
  • At present, there are no plans for an employer controlled digital account.

Northern Ireland

  • Funding is provided by Department for the Economy.
  • The Sector Skills Council and industry bodies identify skills gap and need.
  • Employers advertise apprenticeship vacancies and a local provider provides the training.
  • As yet there is no information on the effect that the Apprenticeship levy may have on accessing the funds.

Funds to each nation state will be allocated according to the employees addresses, using current data held on the HMRC database. This is updated by information sent to HMRC on the Full Payments Submission (FPS).  It is important that residency details are up to date as the funding is directly influenced by them.

Non-levy payers

Non-levy payers will pay at least 10% of the cost of the training, and this is paid direct to the training provider. The other 90% will be paid by the Government up to the maximum amount of funding allowed for that apprenticeship.

For employers with less than 50 employees who employ apprentices between the ages of 19 -­ 24 the 10% contribution is waived.

The current arrangements for funding apprenticeships will continue for non-levy payers.

Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.

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