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Apprenticeship Funding

The funding changes will be different for different sized employers. Please click the section
below that matches up with the size of your business.
As a large employer (with more than 50 employees and a pay bill of over £3 million) you will pay an annual Apprenticeship levy. The levy will be 0.5% of your annual pay bill. All employers have a £15,000 levy allowance which is why only employers with a pay bill of more than £3 million will pay the levy. Funds are taken via the PAYE system and placed in an Apprenticeship Service (AS) account. The Government will then give you a 10% top up, meaning you’ll be able to access more funds than you pay into the levy. You can access the funds through your AS account to purchase Apprenticeship training for new apprentices and to develop existing employees of any age or position – including graduates – as long as there is a need for training and they live or work in England.

As a levy payer, you will pay the full cost of training an apprentice. Each Apprenticeship programme
will fall into one of the ‘funding bands’ ranging from £1,500 to £27,000. Therefore the cost you will have to pay
will depend on which funding band the Apprenticeship you wish the apprentice to do falls into. If the apprentice is aged:

16-18;or

19-24 and is a care leaver or has a Local Authority Education, Health & Care Plan… you’ll receive a £1,000 bonus per apprentice, paid in two equal instalments.
Please note: as apprentices are employees of your company, you are responsible for paying apprentices at least the minimum wage.

Your levy bill will depend on your annual pay bill.

The Government levy calculator will help you find out what you will pay and below are 2 examples of how the levy is calculated.

Example A
Employer of 250 employees, each with a gross salary of £20,000
 
Pay bill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual levy payment
Plus 10% Government top up: £10,000 x 10% = £1,000
Total levy amount to spend: £11,000

 

Example B
Employer of 1000 employees, each with a gross salary of £25,000
 
Pay bill: 1000 x £25,000 = £25,000,000
Levy sum: 0.5% x £25,000,000 = £125,000
Allowance: £125,000 – £15,000 = £110,000 annual levy payment
Plus 10% Government top up: £110,000 x 10% = £11,000
Total levy amount to spend: £121,000

Not a problem. You will revert to Government co-investment funding, where the Government will pay 95% of the Apprenticeship training costs and you will only pay the remaining 5%. You will still get the £1,000 incentive if your apprentice is aged:

• 16-18; or
• 19-24 and is a care leaver or has a Local Authority Education, Health & Care Plan.

 

This may mean that you receive more money back than you spend on Apprenticeship training.

For example:

Total cost of Apprenticeship = £5,000
Employer co-investment (5%) = £250 + VAT*
Government incentive payment for a 16-18 year old = £1,000
Employer gain = £750

*VAT may be recoverable if you are a VAT registered company.

Not a problem. You will revert to Government co-investment funding, where the Government will pay 95% of the Apprenticeship training costs and you will only pay the remaining 5%. You will still get the £1,000 incentive if your apprentice is aged:

• 16-18; or
• 19-24 and is a care leaver or has a Local Authority Education, Health & Care Plan.

 

This may mean that you receive more money back than you spend on Apprenticeship training.

For example:

Total cost of Apprenticeship = £5,000
Employer co-investment (5%) = £250 + VAT*
Government incentive payment for a 16-18 year old = £1,000
Employer gain = £750

*VAT may be recoverable if you are a VAT registered company.

Each Apprenticeship programme will fall into one of the ‘funding bands’ ranging from £1,500 to £27,000. Therefore the 5% cost you will have to pay will depend on which funding band the type of Apprenticeship you wish the apprentice to do falls into.

The below example is for £3,000

Total cost of Apprenticeship£3,000
Employer co-investment (5%)
(payable monthly by instalments)
£150 + VAT*
Maximum Government Co-investment (95%)£2,850

 

*VAT may be recoverable if you are a VAT registered company.

You’ll need to spend your Apprenticeship levy funds within 24 months of them appearing in your Apprenticeship Service (AS) account or you will lose them, so it’s worth planning how you’ll use your levy funds now to make sure you don’t miss out.

Employers who pay the apprenticeship levy are able to transfer unused apprenticeship funds to other organisations, to pay for apprenticeship training and assessment. A maximum of 25% of a company’s annual levy funds may be transferred, which is calculated from the total amount of levy declared during the previous tax year.

Transfers have been introduced in response to employer demand, allowing levy paying employers to spend some of their funding to help upskill the workforce of other employers, perhaps in their supply chain.

Levy paying employers are able to transfer funds to any employer and will have to agree the apprenticeships that are being funded by a transfer, with the employer receiving the funds. Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship Standards and the transfer must cover the cost in full.

For more information go to the transferring unused apprenticeship funds to other employers page on GOV.UK, read this blog on 7 pointers to help employers prepare for transfers on the apprenticeship service and take a look at this short video.

If you are a levy paying company, you will need to set up your Apprenticeship Service account by clicking here.  This will allow you to access your levy funds, add learners to your account and make payments.

If you are not sure whether you will need to pay the levy, please use the Government levy calculator to find out.

You can also follow @ESFADigital on Twitter for the latest updates on the Apprenticeship Service.

Below are the Government’s answers to the top 5 questions employers ask when registering for the Apprenticeship Service.

  1. 1. Where do I get my Government Gateway details from?

As part of the registration process, you’ll need to enter the Government Gateway username and password associated with your PAYE scheme. This is so that we can link the amount of levy you’ve paid to your account. Depending on the size and complexity of your organisation, this might be more straightforward for some than others. The first thing to do is to talk to your payroll department. Hopefully, they should have access to the credentials and should be able to help you set-up the account.

If your payroll is outsourced, you might find that the Government Gateway account your agent uses is not suitable for use on the apprenticeship service. If this happens, you’ll need to set up a Government Gateway account before you can register. To do this, you’ll need your Accounts Office reference and your PAYE scheme number. Your agent should be able to provide you with this. You can find out more about setting up a Government Gateway account here. Doing this won’t affect the way you currently manage your payroll, your agent can carry on as normal.

If your payroll department or agents are worried about the security of the site or what information it might give you access to, the next question should give them some reassurance.

  1. 2. Is there any sensitive PAYE information visible in the account?

Once the PAYE schemes are linked to the account, the only information that is shown in the account is the amount of levy paid against the scheme. There is no access to any other payroll information within the account. The Government Gateway user name and password entered during registration can’t be accessed from the account, and they only need to be entered once during registration.

  1. 3. Should I set up one account or more?

That really depends on how you want to manage your levy. If you have more than one PAYE scheme, you can add them to separate accounts if you wish. The benefit of this is that you have a greater degree of separation between the funds, and it might be easier for you to manage if you have subsidiaries or areas of the business that are managed autonomously. The disadvantage is that you can’t move funds between accounts, so if you would prefer to manage your levy as one amount across all of your connected companies, it would be best to add them all to the same account.

  1. 4. Should I add my connected companies to my account or not?

To receive levy from your connected companies, you only need to add their PAYE schemes to the account. Whether or not you add your connected companies as legal entities to the account depends on how you contract with your training provider. Only legal entities who contract with training providers need to be added to the account. The legal entity that is named on the contract with your training provider should be added to the account under the ‘organisations’ section.

  1. 5. If I give staff in my connected companies access to the account, will they be able to see information from other connected companies?

At the moment, they will. There is currently no way to section your account to control spend or access against connected companies or sites, however we know that this is something employers would like, so we’re looking into how we could do this in the future.

The Government will soon be adding a new piece of functionality into the Apprenticeship Service. This will enable levy-paying employers to add apprentices and set up payments to training providers.

The Government has recorded this video to take you through how the process will work and below are answers to the most common questions employers ask about adding apprentices and setting up payments in their Apprenticeship Service account.

1. How much administration will I have to do when setting up payments?

You can choose to do as much or as little as you like. To set up a payment, you’ll need to add apprentices to the account. You can choose whether you do this, or whether you would prefer to ask your training provider to do it for you. If you choose to hand it over to your training provider, all you’ll need to do is set up the request, and then approve the data when your training provider sends it back you. You can do this as infrequently as once a month or more frequently if you want to.

2. Should I give my training provider access to my account?

No, training providers will have their own access to the apprenticeship service and they’ll be able to add apprentice data for you from there. The apprentice data will then be sent back to you for approval.

3. What’s the deadline each month for adding apprentices to the service?

Your training provider will need to submit data about your apprentices to the Skills Funding Agency by the 4th working day of each month, and that data needs to match the data that you have approved on the apprenticeship service. You should talk to your training provider about a reasonable deadline to allow them to make sure the data is in order before the end of the month.

4. Which of my connected companies should I register my apprentices against on the service?

If you have more than one connected company registered to your account, you’ll be asked to select one of them as part of the process of adding the apprentice details to the account. The connected company you select should be the same as the company named on the contract with your training provider. The training provider will have to verify that the organisation on the contract is the same as the one approving the apprentice details on the service, so it’s important to make sure that this is done correctly.

5. Do I have to upload the contract between my organisation and my training provider?

No – whilst the agreement with the Skills Funding agency states that you must have a contract in place between your organisation and the training provider, this does not need to be uploaded on to the system.

Further information

This is the latest post in the Government series on the Apprenticeship Service. If you’d like to read more, you can sign up for email updates or follow @ESFADigital on Twitter.

As a small to medium employer (with 50+ employees and a pay bill of less than £3 million) you’ll receive ‘co-investment’ funding from the Government. This means the Government will pay 95% of the Apprenticeship training costs and you will only pay the remaining 5%.

In addition, if the apprentice is aged:

16-18;or

19-24 and is a care leaver or has a Local Authority Education, Health & Care Plan… you’ll receive a £1,000 bonus per apprentice, paid in two equal instalments.

This may mean that you receive more money back than you spend on Apprenticeship training. For example:

Total cost of Apprenticeship = £5,000
Employer co-investment (5%) = £250 plus VAT*
Government incentive payment for a 16-18 year old = £1,000
Employer gain = £750

Please note: as apprentices are employees of your company, you are responsible for paying apprentices at least the minimum wage.
*VAT may be recoverable if you are a VAT registered company.

Not at all. You can recruit new apprentices and put existing or new staff members, including graduates, on an Apprenticeship programme and access co-investment funding.

Apprenticeship training for existing employees must develop new or different skills.

Each Apprenticeship programme will fall into one of the ‘funding bands’ ranging from £1,500 to £27,000. Therefore the 5% cost you will have to pay will depend on which funding band the type of Apprenticeship you wish the apprentice to do falls into.

The below example is for £3,000

Total cost of Apprenticeship£3,000
Employer co-investment (5%)
(payable monthly by instalments)
£150 + VAT*
Maximum Government Co-investment (95%)£2,850

*VAT may be recoverable if you are a VAT registered company.

No. You can recruit as many apprentices and put as many existing and new staff on Apprenticeship programmes as you want. You will also receive an incentive payment of £1,000* for every apprentice aged:

• 16-18; or

• 19-24 who is a care leaver or has a Local Authority Education, Health & Care Plan.

*Incentive payments are made in two equal instalments of £500; the first after the apprentice has been on programme for three months and the second after the apprentice has been on programme for 12 months.  It may take up to nine weeks after the payment dates for the funds to be processed and transferred.

Employers who pay the apprenticeship levy are able to transfer unused apprenticeship funds to other organisations, to pay for apprenticeship training and assessment. A maximum of 25% of a company’s annual levy funds may be transferred, which is calculated from the total amount of levy declared during the previous tax year.

Transfers have been introduced in response to employer demand, allowing levy paying employers to spend some of their funding to help upskill the workforce of other employers, perhaps in their supply chain.

Levy paying employers are able to transfer funds to any employer and will have to agree the apprenticeships that are being funded by a transfer, with the employer receiving the funds. Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship Standards and the transfer must cover the cost in full.

For more information go to the transferring unused apprenticeship funds to other employers page on GOV.UK, read this blog on 7 pointers to help employers prepare for transfers on the apprenticeship service and take a look at this short video.

As a small employer (with 49 or fewer employees) you’ll not have to contribute towards the cost of Apprenticeship training if the apprentice is aged:

16-18;or

19-24 and is a care leaver or has a Local Authority Education, Health & Care Plan… you’ll receive a £1,000 bonus per apprentice, paid in two equal instalments.

This means that the Government will pay 100% of the training costs. In addition, apprentices in the above categories will also attract a bonus payment of £1,000 each, payable in two equal instalments.

If the apprentice is not part of one of these two categories and therefore not eligible for full funding, you’ll be able to access Government co-investment funding. Training may be undertaken for new and existing employees, including graduates, as long as the Apprenticeship develops new or different skills.

Please note: as apprentices are employees of your company, you are responsible for paying apprentices at least the minimum wage.

As a small employer, Apprenticeship training will be free for any of your employees who are aged:

  • • 16-18; or
  • • 19-24 and are care leavers or have a Local Authority Education, Health & Care Plan.

If you wish to train an employee aged 19+ who is not a care leaver/does not have a Local Authority Education, Health & Care Plan, you are able to access Government co-investment funding.  This means the Government will pay 95% of the Apprenticeship training costs and you will only pay the remaining 5%.

For example, an Apprenticeship costing £5,000 will mean:

  • • you will pay £250 plus VAT* (i.e. 5% of the Apprenticeship cost), which is equivalent to £5.77 inc VAT per week, or £25 inc VAT per month.
  • • the Government will pay £4,750 (i.e. 95% of the Apprenticeship cost).

*VAT may be recoverable if you are VAT registered.

Each Apprenticeship programme will fall into one of the ‘funding bands’ ranging from £1,500 to £27,000. Therefore the 5% cost you will have to pay will depend on which funding band the type of Apprenticeship you wish the apprentice to do falls into.

The below example is for £3,000

Total cost of Apprenticeship£3,000
Employer co-investment (5%)
(payable monthly by instalments)
£150 + VAT*
Maximum Government Co-investment (95%)£2,850

 

*VAT may be recoverable if you are a VAT registered company.

No. You can recruit as many apprentices and put as many existing and new staff on Apprenticeship programmes as you want. You will also receive an incentive payment of £1,000* for every apprentice aged:

• 16-18; or

• 19-24 who is a care leaver or has a Local Authority Education, Health & Care Plan.

*Incentive payments are made in two equal instalments of £500; the first after the apprentice has been on programme for three months and the second after the apprentice has been on programme for 12 months.  It may take up to nine weeks after the payment dates for the funds to be processed and transferred.

Not at all. You can recruit new apprentices and put existing or new staff members, including graduates, on an Apprenticeship programme and access co-investment funding.

Apprenticeship training for existing employees must develop new or different skills.

Employers who pay the apprenticeship levy are able to transfer unused apprenticeship funds to other organisations, to pay for apprenticeship training and assessment. A maximum of 25% of a company’s annual levy funds may be transferred, which is calculated from the total amount of levy declared during the previous tax year.

Transfers have been introduced in response to employer demand, allowing levy paying employers to spend some of their funding to help upskill the workforce of other employers, perhaps in their supply chain.

Levy paying employers are able to transfer funds to any employer and will have to agree the apprenticeships that are being funded by a transfer, with the employer receiving the funds. Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship Standards and the transfer must cover the cost in full.

For more information go to the transferring unused apprenticeship funds to other employers page on GOV.UK, read this blog on 7 pointers to help employers prepare for transfers on the apprenticeship service and take a look at this short video.

Our Apprenticeships

Apprenticeships are continuing to go through many changes, constantly changing and updating.
We are here to give that expert advice. The government’s strategy to meet these changing needs, includes;

a Government commitment to
3 million Apprenticeship starts
by 2020

the creation of the Institute for
Apprenticeships (IfA) to oversee Apprenticeship standards.

the launch of an online Apprenticeship
Service (AS) to support employers choose
an Apprenticeship, find a training provider
and a candidate.

changes to funding

the replacement of Apprenticeship Frameworks with a new range of Apprenticeship Standards designed by groups of employers to truly meet industry need.

a target of 2.3% Apprenticeship starts
per year in public sector
organisations.

Helping you plan your strategy

Whether you’re a large or small employer, NLTG are here to help.
We can provide you with a free consultation service, answer your questions and work with you to:
  • review your Apprenticeship training needs and develop a bespoke strategy to develop new and existing employees.
  • implement and manage your levy if you're a large levy paying company.
  • take full advantage of the new funding opportunities, including Government co-investment funding.

Get in touch

Have a Question? Fill out our short contact form if you have a question or would like more information and we will get right back to you