The apprenticeship levy was introduced on 6 April (although funds will not appear in an employer's digital account until just before the end of May for levy paid on their April payroll).
It is being introduced by the government as part of a drive to help people get the skills they need for a successful career and aims to put the funding of apprenticeships on a sustainable long-term footing.
Employers with an annual pay bill of more than £3 million will need to spend 0.5% of their total pay bill on the apprenticeship levy. A "levy allowance" of £15,000 per year is being introduced, so the total amount that an employer needs to spend is 0.5% of their pay bill, minus £15,000.
The new apprenticeship funding system starts on 1 May. Any apprenticeships started from this date will be funded according to the new rules. This applies to all employers, both those paying the levy and those who do not.
What is an apprenticeship?
An apprenticeship is a job with an accompanying skills development programme. There must be a genuine job available after the apprenticeship has been completed. An apprentice will gain the technical knowledge, practical experience and wider skills needed for their immediate job and future career through a mixture of learning in the workplace, off-the-job training and the opportunity to practice new skills in a real work environment.
Apprenticeship training
Once the levy has been declared to HMRC the employer will be able to access funding for apprenticeships through a new digital apprenticeship service account. Funds from the account can only be spent on training from a government-approved provider.
Providers who want to deliver less than £100,000 of apprenticeship training per year as a subcontractor can choose to apply for inclusion on the Government's Register of Apprenticeship Training Providers but it is not compulsory.
What is an Apprenticeship Training Agency?
An alternative to an individual employer either obtaining training from an approved provider or providing training to its own staff as an approved training provider, is for a number of providers to form a cost sharing group to provide training by way of an Apprenticeship Training Agency (ATA). An ATA is an organisation whose main business is employing apprentices who are made available to employers for a fee. It has to be set up as a distinct legal entity so that apprentices can have employment contracts with the ATA.
It is possible for an ATA to be set up as a company so if a cost sharing group was established to provide training this structure would work. In order to become a recognised ATA it will be necessary to comply with the features and behaviours detailed in the ATA framework.
