The Apprenticeship Levy is a tax on UK employers with a pay bill over £3 million each year and is charged at 0.5 per cent of the employer’s annual pay bill.
Levy payments are made monthly to HMRC through the PAYE process and held in an Apprenticeship Service account. They can then be spent on apprenticeships for new or existing staff.
The idea behind the levy is that it encourages large organisations to invest in training for their staff. However in 2020/21, there was £250M in unspent levy funds which remained unused.
Unfortunately, these funds have to be used within 24 months of their original deposit date, for example, levy funds paid in March 2020 will need to be spent by March 2022.
If your levy funds have not been spent within 24 months, that money goes back to the government to provide 95%-100% apprenticeship funding to SMEs.
The Funding Projection Tool in your Apprenticeship Service Account can help you see how much funding will expire each month so you can plan to use it in advance.
If your business is not in a position to take on a new apprentice to make use of these funds, you have a couple of other options to consider:
Upskill existing staff – you can use your levy funds to upskill an existing member of staff via an apprenticeship. This can help them learn new skills, progress their career, and take on new responsibilities within the business.
Gift 25% of your funds to an SME – you can choose to gift up to 25 per cent of your unspent levy funds to an SME and become a sponsor of vocational training in that industry. This is great for CSR and developing industry relationships (with no additional costs to do so).
Across Total People, we have dedicated and highly equipped teams to ensure your business objectives are achieved. We are ideally placed to offer impartial solutions to using your Apprenticeship Levy and can co-create training that aligns to your organisational needs.