2017 - the year of the apprenticeship levy has arrived.
From April 6, the levy will come into effect and eligible employers will begin to pay. Over the next three years, the levy is expected to fund the government’s target of three million new apprenticeships.
There's been lots of talk about the apprenticeship levy in recent months which has led to myths arising around the ins and outs of how it will be managed. We've taken a look at the top six misconceptions and put them right for you so that you can be clear on the facts:
Myth 1: All businesses will have to contribute to the apprenticeship levy in some shape or form.
Only employers with a total employee pay bill above £3 million a year will need to pay the apprenticeship levy at a rate of 0.5%. However, if your pay bill is below that amount and you are part of a group of employers, you will still pay the levy as your overall company only has one levy allowance. You can find out more about the definition of connected companies here.
Myth 2: Companies choosing to take on apprentices will get £15,000 extra to spend on training.
The £15,000 from the government is an allowance and is deducted from the 0.5% of the pay bill. Every employer will receive this allowance to offset against their levy payment. The levy will only be payable on pay bills above £3 million per year.
Myth 3: The apprenticeship levy funds can be spent on anything, as long as it involves apprenticeships or training.
The funds may only be used towards the cost of apprenticeship training and end point assessment with an approved training provider. Other expenses such as travel, apprentice wages, work placement programmes or set up costs will not be covered.
Myth 4: There are no funding caps on the amount of levy funds you can spend on training for an individual apprentice.
Funding caps will be applied when it comes to how much can be spent on each apprenticeship, however these will vary depending on the length or type of apprenticeship. Each apprenticeship framework and standard will be allocated to a funding band. You can find more information on the funding caps here.
Myth 5: The apprenticeship can be delivered by any external training provider.
Apprenticeships may only be delivered by an external training provider if they are on the register of apprenticeship training providers. Employers can choose to deliver the training as an employer-provider if they have successfully registered; if your company is taking this route, you can download our handy webinar on the quality requirements from Ofsted, as this is one of the things you will need to consider.
Myth 6: The apprenticeship levy won't affect me if I am a small employer.
Whilst small employers with a pay bill under £3 million will not have to pay the levy, opportunities can be taken from the funding available. Small businesses will be able to access levy funds to pay for 90% of the cost of their apprenticeships (subject to the cap), and from 2020 will have access to a digital apprenticeship service online account.
This year is going to bring a lot of changes and we want to make sure you are kept updated all the way. You can download our free apprenticeship reforms guide here which offers tips and advice on how to get ready for the changes in funding and delivery.