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Are you ready for the apprenticeship levy?

The government is changing the way it funds apprenticeships in England as part of a drive to increase the number of apprenticeships in England to three million by 2020. All employers in the UK with a pay bill of over £3m each year will have to pay a 0.5 per cent levy on their monthly pay bill subject to an annual allowance of £15,000. This comes into effect on 6 April 2017.

How will an employer spend its levy?

Levy payers will access apprenticeship funding through the Digital Apprenticeship Service (DAS). The DAS will provide a one-stop shop to select an apprenticeship framework or standard, choose a training provider and pay for the training and assessment. Funds will expire 24 months after the date on which they enter the account.

Are there any limitations?

The funds can only be used for training and assessment costs for apprenticeships (starting after May 2017), not for apprentices’ wages or any other type of training. In addition, employers will only be able to spend funds on courses run by approved training providers and subject to financial limits. The existing apprenticeship frameworks will be phased out by 2020 and replaced by employer-led apprenticeship standards which will cover the core skills, knowledge and behaviours an apprentice will need to be competent in their job. These standards are being developed by employer groups known as ‘trail blazers’.

What if you are not a levy payer?

Initially, non-levy payers will not use the DAS and will be asked to make a 10 per cent contribution to the cost of training with the government paying the rest. This co-investment is also available for employers who have used up their levy funds.

What should you do now?

1.Ascertain whether you would be a levy payer, and if so how much that would be.

2.Take steps to register with the DAS and make the necessary declarations to HMRC.

3.Consider your training requirements and how you could use your levy.

4.Consider joining with other employers to develop an apprenticeship standard.

Graham Irons is a Partner at Howes Percival LLP specialising in employment law and can be contacted on 01604 258003 or at

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