Apprenticeship levy funding changes: what employers need to know

From April 1, 2019, the maximum amount of apprenticeship levy which you can pass to your supply chain is set to increase from 10% to 25%. But what does that mean for employers? Here's your guide to how the change works, how it will affect your business, and everything you need to know about implementing it. 

Transferring unused apprenticeship funds to another employer

Apprenticeship levy employers will be able to distribute a greater amount of funding throughout their supply chain from April 1. You can transfer funds of up to 25%. These transfers will come from your annual funds, and can only be used on apprenticeship standards. You can make payments to more than one employer, provided the total does not exceed 25%. As agreed with the receiving employer, the funds can also be used to finance assessment and training for apprenticeships, and for up-skilling your apprentices. 

What you need to know: apprenticeship levy employers

Before making a transfer, apprenticeship levy employers need to check some key points. Firstly, you will need to ensure that there is enough money in your account to cover the transferred funds. You will also need to agree on the specifics of which apprenticeships are being funded with the receiving employer. It is important to agree on these details beforehand, as you will be funding the total cost of these apprenticeships, not just the co-investment. 

As well as hashing out the particulars of specific apprenticeships, ensure you clearly understand the projected costs you will be accountable for. This cost covers the full length that the apprenticeship runs for which you’ve arranged to fund. Transfer payments will leave your account automatically, on the first of each month, and continue until the end of the apprenticeship, or until the apprenticeship ceases – in which case, your transferred payments will also end.

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Be aware

There are some important caveats with transferring apprenticeship levies which you need to be aware of. If you are presently in receipt of a transfer, it is not possible to transfer funds across to a different employer. It's also not possible to receive transferred funds to cover your own apprenticeships if you transfer funds to a different employer to pay for theirs.

What you need to know: receiving employers

If you wish to receive a transfer in from an apprenticeship levy employer, there are some key points to keep in mind. Firstly, the transferred funds may only be used on apprenticeship training, or for assessment. They may also only be used for apprenticeship standards and can fund up to the funding band maximum of a standard. If the cost of training is more, you will have to pay the difference to the training provider. Note that if a training provider transfers funds to you, they cannot deliver the training for that funded apprenticeship.

Before receiving funding, you will need to set up an account on the apprenticeship service to receive the transfer and issue payment for apprenticeship training. You will make an agreement with the Education and Skills Funding Agency (ESFA), and will be liable for certain responsibilities; most importantly, if the apprenticeship levy employer's funds run out, you will be liable for a 5% contribution to the remaining apprenticeship training cost. The remaining 95% will be paid by the government; this is termed co-investment. 

Once the transfer has been set up, payments will be received every month to your apprenticeship account from the sending employer. If the apprenticeship is terminated for any reason, funding will also cease; if this is the case, note that you won’t have to repay any money back to the sending employer.

How it works

  1. Both parties agree details for the levy transfer; for example, which apprenticeship standard, how many apprentices, or what the cost will be
  2. Ensure that both employers are registered on the apprenticeship service
  3. Connect with each other on the apprenticeship service
  4. The receiving employer will add apprentice details
  5. Confirm the transfer – and you're good to go!

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Blog by Susan Plant, Partnerships Manager @SusanMPlant