Each apprenticeship programme is allocated to one of 30 different funding bands which are overseen and regularly reviewed by the Institute for Apprenticeships. Each funding band ranges from £1,500 to £27,000. This means that:

• If you’re a large employer paying the levy, the upper limit of the funding band is the maximum amount of digital funds you can use towards an individual apprenticeship, or the government will contribute to if you have insufficient digital funds and are eligible for extra government support
• If you’re a non-levy paying employer, the upper limit of the funding band sets the maximum price that the government will co-invest towards an individual apprenticeship

If you’re an employer with a payroll bill over £3 million each year you’ll be paying an apprenticeship levy of 0.5% via the HMRC PAYE. This levy can only be spent on apprenticeship training and assessment for those that work at least 50% of the time in England, but the payroll bill covers all staff working across the UK, including Scotland, Wales and Northern Ireland.

Things you should also be aware of if you are paying the levy:

• You’ll only be able to use the levy up to the funding band maximum for the apprenticeship programme
• If your training provider charges additional fees for services and or training, you will need to pay for this separately as it isn’t eligible for the levy
• The levy cannot be used on things like wages, travel or setting up a programme.
• Employers who are not connected to another company or charity will have an allowance of £15,000 each year, reducing the amount of levy you pay by £15,000 across the year
• The money from the levy can only be accessed via an online digital account. You will need to set up and register for the apprenticeship service
• The Education and Skills Funding Agency ‘top-up’ the online account with an additional 10% investment
• The levy will accrue every month with any unused/unspent funds from the digital account being automatically carried over into the next month
• If in any single month there are insufficient funds available in your digital account to meet the full costs of the apprenticeship training and assessment, you’ll need to co-invest 5% of the outstanding monthly balance, with the government paying the remainder
• The government have set a time limit of 24 months to use the levy on apprenticeships before it expires. So, for example, the amount of levy paid into your digital account for the month of October 2021 will need to be used by October 2023 before it then expires. If you do not use the levy in this time the money is removed from your digital account
• You can transfer up to 25% of the annual value of the levy funds to another employer to support apprenticeships. Employers in receipt of these funds need to take into account state aid rules

If you have an annual payroll bill of less than £3 million a year, you won’t have to pay the apprenticeship levy. Instead, the government will share the cost of apprenticeship training with you.

You’ll need to contribute 5% towards the cost of the apprenticeship programme with the remaining 95% paid by the government. This is called ‘co-investment’.

You could be eligible for extra funding depending on both you and your apprentice’s circumstances.

For example:

• If an apprentice is aged 16-18 years of age, or has previously been in care or who has a Local Authority Education, Health and Care plan, you will receive £1,000 to help with additional costs.
• Employers with fewer than 50 people working for them can train at no cost those aged 19-24 who have previously been in care or who have a Local Authority Education, Health and Care plan. These employers are not required to contribute the 5% co-investment; instead, the government will pay 100% of the training costs.