Apprenticeship levy reforms

The measure

Since 6 April 2017,  employers have been required to pay the apprenticeship levy. The levy is set at a rate of 0.5% of an employer’s annual pay bill and is collected through the PAYE system. Employers receive an annual allowance of £15,000 to offset against payment of the levy, and therefore the levy is payable only by employers who have pay bills in excess of £3 million per year.

The government has announced that it will introduce a package of reforms to strengthen the role of employers in the apprenticeship programme, so they can develop the skills they need to succeed. As part of this:

• the government will make up to £450 million available to enable levy paying employers to transfer up to 25% of their funds to pay for apprenticeship training in their supply chains;
• the government will provide up to £240 million, to halve the co-investment rate for apprenticeship training from 10% to 5%;
• the government will also provide up to £5 million to the Institute for Apprenticeships and National Apprenticeship Service in 2019/20, to identify gaps in the trainer provider market and increase the number of employer-designed apprenticeship standards available to employers. All new apprenticeships will start on these new, higher quality courses from September 2020;
• the Exchequer Secretary to the Treasury and the Minister for Apprenticeships and Skills will work with a range of employers and providers to consider how they are responding to the apprenticeship levy across different sectors and regions in England.

Who will be affected?

All employers and businesses who offer apprenticeship programmes and pay the apprenticeship levy.

When will the measure come into effect?

These measures will be implemented from 6 April 2019.