Apprenticeship Levy – Use it or lose it!

Are you making the most of claiming back funding from the Apprenticeship Levy you pay?

In March 2019, the National Audit Office reported that in 2017-2018 levy-paying employers used just 9% of the funds available to them to support new apprenticeships, equating to £170 million of almost £2.2 billion available*.

The apprenticeships programme is intended to help address two important problems: poor productivity in the UK compared with many international competitors; and a sharp fall in employers’ investment in training over recent decades.

Companies who have an annual payroll that is over £3m pay 0.05% each month which is allocated to them for apprenticeship training. So why are Levy paying companies not claiming back their full entitlement? indeed, why aren’t all businesses small and large making the most of hiring keen would-be apprentices or using the apprenticeship scheme to upskill their key staff?

Any business can employ an apprentice or upskill staff with training that is entirely or partially funded and if an SME (Non-Levy) employs an apprentice between 16 and 18 they will receive a £1000.00 incentive per apprentice, whilst Levy employers receive an extra 10% of funding paid into their Digital Apprentice Account.

Apprentices are valuable and add value

A report produced by Grant Thornton in March 2018 detailed positive feedback from employers: -
• 86% believe that apprenticeships increase social mobility in their organisation
• 91% believe offering formal training and development increases employee wellbeing
Grant Thornton’s report also highlighted that 44% of businesses are not aware or do not currently use apprenticeship funding as a means of upskilling their people and that 1 out of 5 employers are not aware that they will lose the ability to utilise their levy payments.

What happens if you don’t utilise your levy contributions?

Well, in short, you will lose the levy money you contributed on a month-by-month basis two years after the funds enter your account and the money will go back to the Government.
So, if you do not wish to use or have not made the most of your funding perhaps consider these options:
• Apprentices training can be provided for anyone of any age
• You can use your levy account to fund further training of existing key employees
• As a levy employer you can share your levy funds or any not spent, up to 25% of your total funds available, for example, with key suppliers, which can help improve relationships with your supply chain, support your business relationships and develop the skills in your sector as part of your business planning

There are new reforms to the way apprentices work for large and small businesses alike, these reforms are intended make it easier for SME’s to access apprenticeship funding, click here for more information about funding for recruiting an apprentice or training your workforce

Sources *

17 Mar 2020