Levy Employers

Accessing money paid under the apprenticeship levy

Once you have declared 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.

Note: 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 Separate arrangements will be in place in Scotland, Wales and Northern Ireland.

Creating an account to access your funds

Online tools for employers will be available via the digital apprenticeship service over the next year. You will be able to register to create your account from January 2017 and you’ll be able to familiarise yourself with the service.

When you’ve registered, you’ll need to verify your PAYE schemes and link them to your account. You will be able to use more than one account if you’d like to keep your schemes separate.

When funds will appear in your digital account

The apprenticeship levy will be introduced on 6 April 2017. The first time eligible employers will have to declare their liability to HMRC will be in May 2017 for levy due on their April payroll. Levy-paying employers will be able to see corresponding funds in their digital accounts shortly after their final declaration to HMRC, so after 22 May.

Using funds in your digital account to buy training

You will be asked to negotiate and agree a price with the ‘lead’ training provider you have chosen from the approved register. This price will cover the delivery of apprenticeship training towards a specific standard or framework, and the cost of assessing the apprentice at the end of their apprenticeship (end-point assessment). The lead provider will liaise with and transfer funds through to the assessment organisation at the appropriate time. Apprentices will not be able to achieve the apprenticeship without taking an end-point assessment.

You can use funds in your digital account to pay your training provider, up to the maximum allowed by the relevant funding band. Once the apprenticeship has started monthly payments will be automatically taken from your digital account and sent to the provider.

For example, if the apprenticeship standard you have chosen is in a funding band with a limit of £9,000 and you negotiate a price of £8,000 with your training provider. The government will deduct this amount from your digital account, in monthly instalments, over the life of the apprenticeship and pass to the provider.

If you negotiate a price with a training provider that is more than the maximum allowed by the funding band, then you must pay the difference between the band maximum and the agreed price, in full. You can’t make this payment from your digital account. The new system will pay providers one month in arrears for training they report has been delivered. This means that the first payments to leave your digital account, for training purchased in May, will be in June.

When you buy apprenticeship training through the digital apprenticeship service you don’t need to have enough funds in your digital account to cover the entire cost of the training at the start. As payments are taken from the digital account monthly, you just need to have enough funds in your account to cover the monthly cost of each apprenticeship you have chosen. You will see funds entering your digital account each month as you pay the levy, and funds leaving the account regularly each month as you pay for training. Initially these payments will be made monthly. In future, the government aim to give you more flexibility over the way payments leave your digital account.

If you choose not to use your digital account to buy apprenticeship training you will need to buy it directly from a training provider, following the same process as employers who do not pay the levy. Buying training if you don’t have enough in your digital account – levy-paying employers If you pay the levy, you may find that over the course of an apprenticeship the funds in your digital account aren’t enough to cover the full cost of the apprenticeship training and assessment you’d like to buy. This may be the case for employers who only pay a small amount of levy or have a variable pay bill and pay the levy in some months but not others.

If you don’t have enough in your account in a particular month, you will be asked to make a contribution to the extra cost of training and to pay this directly to the provider, rather than through your digital account. You will be able to spread this contribution over the lifetime of the apprenticeship and agree a payment schedule with your provider. The government will provide support to help you meet these additional costs, up to the maximum amount of funding available for that apprenticeship. As both you and government make a payment, this is called ‘co-investment’.

Top-ups to the funds in your digital account

Government will apply a 10% top-up to the funds you have for spending on apprenticeship training in England. They will apply the top-up monthly, at the same time the funds enter your digital account. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10.

Expiry of funds in your digital account

Funds will expire 18 months after they enter your digital account unless you spend them on apprenticeship training. This will also apply to any top-ups in your digital account. For example, funds entering your account in September 2017 will expire in March 2019, unless you have spent them. Money is spent when it leaves your digital account as a payment to a training provider.

The account will work on a first-in, first-out basis, through either payment or expiry. Whenever a payment is taken from your digital account it will automatically use the funds that entered your account first. This will minimise the amount of expired funds. This will happen automatically. Your digital account will let you know in good time when any funds are due to expire so that you can arrange to spend them if you wish.

Directing funds in a digital account to another employer

In the first year of the levy, you will be able to use the funds in your digital account to pay for apprenticeship training and assessment for your own employees. The main aim of the apprenticeship levy is to support employers in growing the number and quality of apprenticeships in their own workforce.

The government understands that some employers will want to use funds in their digital account to pay for apprenticeship training of other employer’s apprentices, for example, someone in their supply chain. Views have been sought on proposals to allow employers to transfer 10% of their funds to another employer’s digital account from 2018. You can learn more about this proposal here.

Pooling funds in a digital account with other employers in a group structure

If you are in a group of companies connected for the purposes of paying the levy, your group will be able to collect their funds together into one digital account. Your group will do this by registering to have PAYE schemes attached to a single digital account.

Since you can only use funds in your digital account to pay for apprenticeship training for your own employees, employers that are not connected will not be able to pool funds in a digital account.

Non-Levy Employers

The majority of employers will be required to make a contribution to the cost of this training and government will pay the rest, up to the maximum amount of government funding available for that apprenticeship, within the funding band. You will negotiate and agree a price with the training provider you have chosen from the approved register. This price will cover the delivery of apprenticeship training towards a specific standard or framework, and the cost of end-point assessment. You pay for this through co-investment with government. You will be asked to pay this directly to the provider and you will be able to spread it over the life time of the apprenticeship agreeing a payment schedule with the provider as part of a formal written agreement.

Every individual apprenticeship framework and new apprenticeship standard will be allocated to a funding band. The upper limit of the funding band will cap the maximum price that government will ‘co-invest’ towards.

Your payment plus the government contribution should not total more than the maximum allowed by the funding band for the standard or framework you have chosen. However, if you negotiate a price with a provider that is more than the maximum allowed by the funding band, then you must pay the difference between the band maximum and the agreed price, in full. You won’t get government support towards these costs.

An indicative tool has been created for employers to estimate how much the government will contribute towards the cost of training. Currently views are being sought on the proposals that government pays 90% towards the cost of training and assessment, and employers pay the remaining 10%. The government will finalise details and confirm the co-investment rate in October 2016.

Support for small employers

Currently small employers (those with fewer than 50 employees) have a tradition of employing younger apprentices. To encourage this to continue the government propose to waive the co-investment requirement for small employers that train 16-18-year-old apprentices. This means these employers will not have to contribute towards the cost of training apprentices for this age group. It is also proposed that the government pays 100% of the apprenticeship training costs for small employers where the apprentice is a 19-24-year-old care leaver or is 19-24 years of age and has a Local Authority Education, Health and Care plan.

Written agreements/Commitment Statement and Payment Schedule

Once an employer has identified a lead delivery provider and agreed a price for delivery of the new standard (including the end point assessment), they will be required to sign a written agreement which forms the basis of a legal contract with the provider. This will include a payment schedule setting out when employer contributions are to be made. It will be between the employer and provider to determine when payments might be made over the duration of the apprenticeship and this may be different for every employer. In addition, the employer, provider and apprentice will each sign a commitment statement clarifying the roles and responsibilities of all parties. It is also important to note that for apprentices aged 16-18 there will be a requirement that their parents also sign the commitment statement.

Once delivery starts against the agreed standard, the payment schedule commences. Lead providers will be responsible for transferring funds to other providers the employer may be working with including the endpoint assessment provider.

It should be noted that only providers/end-point assessment organisations who are Government registered (identified on the Register of Training Organisations) are able to deliver and draw down apprenticeship funding.

For more information go to Apprenticeship_standards_employers__guide.pdf

Alternatively speak to one of our members of staff on or email info@polino.co.uk.