Many employers think that an apprenticeship ill be too expensive and not financially worthwhile. Others are not sure how it is funded and what financial support is available to them as an employer.  In fact, apprenticeships are funded either through the apprencticeship levy - paid by companies with a payroll over £3 million, or 95% funded by the Government for smaller companies. In short, SMEs will only pay £450 for a fully trained operative. 

How is the apprenticeship levy paid?

The apprenticeship 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?

Smaller, non-levy paying employers can now 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. Click here to set up an account to manage your apprentices:

 What are the Incentive Payments for hiring a new apprentice?

Employers will recieve an additional £1,000 if they hire an apprentice who is:

  • 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.