The Apprenticeship Levy explained…

The apprenticeship levy is designed to help fund the development and delivery of apprenticeships in order to increase the quantity and improve the quality of those available and assist larger employers to fund apprenticeship programmes for new and existing employees. 

Who is eligible for the incentive funding?

In the Budget statement on October 27 2021, The Chancellor of the Exchequer announced an extension to the government funding scheme (due to end on the 30 September 2021)  for employers in England who recruit new apprentices. The new extension now means if a business takes on a new apprentice between 1 October 2021 and 31 January 2022 they are still eligible for an incentive payment.

How much is the incentive funding?

Employers taking on new apprentices from 1 October 2021 to 31 January 2022, will receive an incentive payment of £3,000 per apprentice, whatever their age.

This is a change from the current incentive scheme under which employers receive incentives on a sliding scale, based on the age of the apprentice.

Subject to eligibility criteria (detailed below) there is no limit on the number of incentives that can be claimed.

What are the eligibility criteria?

To qualify for the new incentive funding an apprentice must:

  • Be a new employee to the business
  • Have a contract of employment with a start date between 1 October 2021 and 31 January 2022 (inclusive)
  • Not have been employed by the business within the six months prior to the contract start date

Is the new incentive funding in addition to the payments already available to employers who take on an apprentice? 

The increased incentive funding is in addition to the funding currently available to employers who employ an apprentice aged 16-18*

This means that, subject to meeting eligibility criteria,  employers recruiting new apprentices aged 16-18* between 1 October 2021 and 31 January 2022, will receive a total payment of £4,000 per apprentice.

When are the payments made?

Incentive payments can be claimed through the employer’s apprenticeship service account – register for the service here.

Payment will be made in two equal instalments, where the apprentice is still in learning at day 90 and day 365.

*or an apprentice aged 19-24 who has previously been in care or has a Local Authority Education, Health and Care Plan (EHCP).

For more information on the new incentive funding, email or call 01902 837163

Employers fall into one of two categories: 

  • Levypayers – employers with a payroll of over £3m per annum are required to pay the levy whether they employ an apprentice or not. 
  • Non-levy payers – employers with a payroll of less than £3m per annum do not have to pay the levy and can access financial support to assist in the recruitment and training of new apprentices and existing employees. 
  • Employer makes a 0.5% contribution of the annual salary bill through PAYE 
  • For every £1 paid into the levy pot the employer gets £1.10 to spend on apprenticeship training  
  • Employer uses a digital account to manage apprenticeship funding, see how much is available in the company’s online account and allocate payments to providers of government-approved apprenticeships for the training and development of new or existing apprentices 
  • On full utilisation of the levyall additional apprentices are funded with a requirement to contribute 5% 
  • £1000 cash incentive for recruitment or enrolment of an existing employeeaged 16–18, onto an apprenticeship 
  • Employer makes a 5% contribution towards the training of apprenticeships for new and existing staff 
  • £1000 cash incentive for recruitment of or enrolment of an existing employee, aged 16-18, onto an apprenticeship  
  • Fully-funded apprenticeship training for new and existing staff aged 1618   
  • For apprentices aged 19 or over, the employer makes a 5% contribution to the training 
  • £1000 cash incentive for recruitment or enrolment of an existing employeeaged 16-18onto an apprenticeship 

For more information on the apprenticeship levy email or call 01902 837163

The Apprenticeship Levy at a glance

Apprenticeship Levy