How does apprenticeship funding work?
Apprenticeships are funded in one of two ways:
Apprenticeship Levy Paying employers
Non Levying employers with co-funding from government
Apprenticeship Levy Paying Employers
The Apprenticeship Levy was initiated by the UK government in April 2017, for all employers paying a wage bill of more than £3 million per year. This levy can then be reinvested back into their workforce in the form of Apprenticeship training
The levy is charged at a rate of 0.5% of an employer's pay bill. Each employer receives an allowance of £15,000 to offset against their levy payment.
Your annual wage bill is £5m
Levy sum: 0.5% x £5m = £25,000
Subtracting levy allowance: £25,000 - £15,000 = £10,000 annual levy payment
This money will be deducted monthly by PAYE.
On the occasion that a levy paying employer runs out of funds, they will revert to the co-investment method below.
Non Levy Employer
Where an employers wage bill does not exceed £3m, the government will co-invest at a rate of 95%, therefore the employer will need to contribute the additional 5% of the apprenticeship cost.
The Government will fund 100% of the cost of apprenticeship training for a 16-18-year-old for businesses with fewer than 50 employees.
Currently the following funding is available:
£1,000 for hiring an apprentice who is aged 16 - 18 yrs old, or under 25 with an education, health and care plan (EHCP) or has been in the care of their local authority.
In addition, until the end of March 2021:
£2,000 for apprentices aged 16 to 24
£1,500 for apprentices aged 25 and over.
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