You may think that an apprenticeship is too expensive and not financially worthwhile, or you are not sure how it is funded and what financial support is available to you as an employer. See below for frequently asked questions regarding apprenticeship funding.

How is the apprenticeship levy paid?

Employers with a payroll in excess of £3 million per year are eligible to pay the levy. The levy is charged at a rate of 0.5% of the employer’s annual pay bill and is paid directly to HM Revenue and Customs through their payroll. The levy allowance operates on a monthly basis and accumulates throughout the year. Once an employer’s funds have been fully utilised, the ESFA will directly fund further Apprenticeships by way of a 95% contribution.

How do I access my levy pot to fund Apprenticeships?

Employers access their available funding through the Digital Apprenticeship Service (DAS). This funding is then used to pay for training and assessment of apprenticeships in England.

 What if I operate in England and other parts of the UK?

The levy applies to employers across the UK, however, apprenticeships are a devolved policy. This means that each of the UK nations manages their own apprenticeship programmes, including how funding is spent on apprenticeship training. Separate arrangements are in place for Scotland, Wales and Northern Ireland. Should an employee reside in Scotland, Wales or Northern Ireland but complete a minimum of 50% of their work within England, that would be fundable via the English model. 

Can I spend the available funds in my DAS account whenever I want?

Funds within an employer’s DAS account will expire after 24 months unless they are spent on apprenticeship training. The account works on a first-in, first-out basis, through either use or expiration. Whenever a payment is taken from your DAS account it will automatically use the funds entered first. You will be notified before any funds expire allowing you to maximise their use, either by spending it on apprenticeship training, or transferring up to 25% of it to other employers.

How do I manage my DAS account?

You will need to register to use the apprenticeship service. Ultimately, the funding available via your DAS account is finite so it’s important that the right people in your company have the right access and permission levels to manage this budget. From the account, you are able to authorise new Apprentices, pause and stop existing ones amongst other things.

 How are functional skills funded?

Functional Skills (Maths, English and in some Standards, ICT) are mandatory components of any Apprenticeship. These are funded directly from the ESFA and do not affect the funding in your DAS account.

What about non-levy paying employers?

Since January 2020, smaller, non-levy paying employers (i.e. those with a payroll of less than £3,000,000 per year), have also been encouraged to use the Digital Apprenticeship Service. In principle, it works exactly the same as described above but non-levy paying employers do not pay in to the funding pot; they access funding direct from the ESFA. Whilst initially this has been optional (providers still have procured contracts with the ESFA), from March 2021, the DAS account route will be mandatory for all.

 What are the Incentive Payments for hiring a new Apprentice?

To help stimulate the economy, the ESFA has introduced an incentive scheme to encourage employers to recruit an Apprentice. To be eligible, the Apprentice must:

  • Be a new employee with a contract of employment with a start date of between 01/08/20 and 31/03/21
  • Not have been employed by you in the previous 6 months
  • The Apprenticeship start must have been through the Apprenticeship Service (DAS), regardless of being a levy or non-levy employer
  • Apprentices must be employed and in learning on their Apprenticeship at days 90 and 365 to be entitled to the full incentive amount.

The payment is in addition to the £1,000 employers already receive for hiring an apprentice:

  • aged 16 to 18 years old
  • under 25 with an education, health and care plan or has been in the care of their local authority

What you’ll get

For apprentices aged:

  • 16 to 24, employers will receive £2,000
  • 25 and over, employers will receive £1,500

We’ll need your organisation’s bank details, so that we can pay your organisation directly.

What you can use the payment for?

The payment is different to apprenticeship levy funds, so you can spend it on anything to support your organisation’s costs. For example, on uniforms, your apprentice’s travel or their salary. You do not have to pay it back.


The Author
Gary Pugh
Manager, MET Academy