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 apprenticeship training and assessment through co-investment.
The Government will pay 90% of the price agreed with the training provider, up to the maximum allowed by the funding band for the relevant apprenticeship standard or framework.
Employers with fewer than 50 employees will not be required to pay a contribution to the cost of the apprenticeship where the apprentice is aged 16 to 18 inclusive, or aged 19 to 24 inclusive if he or she has previously been in care or has a local authority education, health and care plan. The Government will pay 100% of the training and assessment costs in these circumstances.
The new system of apprenticeship funding in England comes into force on 1 May 2017.