How will employers that do not pay the apprenticeship levy be able to fund apprenticeships?
Not all employers will be liable to pay the apprenticeship levy. The levy is set at 0.5% of each employer's paybill, but there will be an annual allowance of £15,000 for each employer to offset against the levy. In effect, employers with a paybill of £3 million or less will not be liable to pay the apprenticeship levy (because 0.5% of £3 million is £15,000). Employers that do not pay the levy will be able to receive government funding towards the costs of apprenticeships through co-investment.
The Government will pay a proportion of the price agreed with the training provider, in line with a rate set each year, up to a maximum allowed by the funding band for the relevant apprenticeship standard or framework. The Government has proposed that it will pay 90% of the cost of apprenticeship training and assessment and the employer will pay 10%. It is currently consulting on this proposal and has said that it will confirm the co-investment rate in October 2016.
The new system of apprenticeship funding in England is expected to come into force on 1 May 2017.