Apprenticeship Levy and Funding

From April 2019 the way the Government funds apprenticeships in England has changed.

Some employers will be required to contribute to a new apprenticeship levy and other will need to contribute to the training costs of the apprentice.

See our links below to find out if your business will be contributing to the levy, or qualifies for government contribution to staff training.

To speak to one of our dedicated apprenticeships advisors, complete our contact form below.

Key Info

Paying the apprenticeship levy

All levy payments will be reported and paid directly through HMRC through the PAYE process. This will be the total for all connected companies.

Employers that don’t pay the levy

For non-levy paying employers, the digital apprenticeship services will not be until at least 2018.

Employers will be required to make a 5% contribution to the cost of the training and government will pay the rest (95%), up to the maximum amount of government funding available for that apprenticeship.

More information about the government training contribution.

This will be paid directly to the provider spread over the life time of the apprenticeship. As both the employer and the government make a payment, this is called ‘co-investment’.

Levy rate and allowance

All employers receive an offset allowance of £15,000, equivalent to 0.5% on a payroll of £3 million. Any employer with a payroll above this will be liable to pay the levy.

Top-ups to the funds in your digital account

Employers in England will be able to reclaim their Levy contributions as digital vouchers to pay for training apprentices.

The Government has announced that unspent funds in an employer’s digital account will expire after 24 months.

The digital account works on a ‘first-in, first out’ basis, so payments automatically draw from the funds which entered the account first.

Employers who pay Levy will receive a 10% top-up from Government towards  monthly contributions. So, for every £1 an employer pays in, they can draw out £1.10 to spend on apprenticeship training through their digital account.

Training costs

Each apprenticeship has Government funding caps set. There are 15 new funding bands ranging from £1,500 to £27,000, which have replaced the old apprenticeship framework rates that varied by age.

Government funding, either through the Levy digital account or co-investment for non-levy payers, cannot be used to pay for apprenticeship costs above the funding cap.

How to buy training with funds in your digital account

Funds in the digital account will pay for apprenticeship  training and assessment, according to the funding band  with an approved provider/assessment organisation.

Funds cannot pay for wages, travel or subsidiary costs, managerial costs, work placements, traineeships, or the costs of setting up an apprenticeship programme.

Once the apprenticeship training has started, monthly payments will be automatically taken from the digital account and sent to the provider.

There must be enough funds in the account to cover the monthly cost of each apprenticeship that has been chosen.

Buying training if you don’t have enough in your digital account – (levy-paying employers)

If the funds in the digital account aren’t enough to cover the full cost of the apprenticeship training and assessment, the employer will be asked to make a contribution to the extra cost of training directly to the provider.

As both the employer and government make a payment, this is called ‘co-investment’. This will be set at the same co-investment rate as for employers who do not pay the levy, with government paying 95% towards the extra cost of training and assessment and employers paying the remaining 5%

16 to 18 year old apprentices

The Government is proposing to incentivise employers that take on a 16-18 year old, with a £1,000 payment – paid at 3 and 12 months into the apprenticeship.

If a small employer (those with fewer than 50 employees) takes on a 16-18 year old apprentice, they will be exempt from paying the 5% co-investment. The training costs will be fully covered by Government

Other Government payments?

The Government will provide an additional £1,000 to an employer if they take on an apprentice aged 19-24 who has previously been in care or who has a Local Authority Education, Health Care Plan. 

Contact the Apprenticeship Team



For further information please email the College's apprenticeship team or call on 0208 522 5759.