An employer with an annual pay bill of £3,000,000:
levy sum: 0.5% x £5,000,000 = £25,000
subtracting levy allowance: £25,000 – £15,000 = £10,000 annual levy payment
Calculating the levy for connected companies or charities
Where several employers are connected as a group, they will only be able to use one £15,000 levy allowance. The definition of connected companies and charities is based on the definition in the Employment Allowance.
If you are part of a group of connected employers, you must decide what proportion of the levy allowance each employer in the group will be entitled to. You must make this decision at the beginning of the tax year and will be fixed for that tax year, unless a correction is necessary because the total amount of the levy allowance claimed across the group exceeds £15,000.
Each employer in the group will then calculate what they have to pay through the same processes set out above, but using only their portion of the £15,000 levy allowance.
Accessing money paid under the apprenticeship levy
Once you have declared the levy to HMRC, you will be able to access funding for apprenticeships through a new digital apprenticeship service account.
Through the digital apprenticeship service all employers will be able to:
choose the training provider or providers you want to deliver the training
choose the organisation that will assess your apprentices
post apprenticeship vacancies
If you are an employer who pays the levy, you can also use the digital apprenticeship service to:
set the price you’ve agreed with your training provider
pay for apprenticeship training and assessment
tell HMRC to stop or pause payments (for example, if your apprentice stops their training, your apprentice takes a break from training or you haven’t received the service you agreed with the provider).
Top-ups to the funds in your digital account
The Government will apply a 10% top-up to the funds you have for spending on apprenticeship training in England. The top-up will be applied monthly at the same time the funds enter your digital account.
This means for every £1 that enters your digital account to spend in England on apprenticeship training, you will receive £1.10.
Expiry of funds in your digital account
You will need to be aware that funds will expire 24 months after they enter your digital account unless you spend them on apprenticeship training with a training provider. Whenever a payment is taken from your digital account, the service automatically uses the funds that entered your account first.
This will minimise the amount of expired funds and will happen automatically. Your digital account will let you know in good time when any funds are due to expire so that you can arrange to spend them if you wish.
Using funds in your digital account to buy training
Once the apprenticeship training you’ve bought has started, monthly payments will be automatically taken from your digital account and sent to the provider.
You just need to have enough funds in your account to cover the monthly cost of each apprenticeship you have chosen. You will see funds entering your digital account each month as you pay the levy, and funds leaving the account each month as you pay for training.
You will be able to spread this contribution over the lifetime of the apprenticeship and agree a payment schedule with your provider.
Buying training if you don’t have enough in your digital account – levy-paying employers
If you pay the levy, you may find that over the course of an apprenticeship the funds in your digital account aren’t enough to cover the full cost of the apprenticeship training and assessment you’d like to buy. This may be the case for employers who only pay a small amount of levy or have a variable pay bill and pay the levy in some months but not others.
If you don’t have enough in your account in a particular month, you will be asked to make a contribution to the extra cost of training and to pay this directly to the provider, rather than through your digital account. You will be able to spread this contribution over the lifetime of the apprenticeship and agree a payment schedule with your provider. The Government will provide support to help you meet these additional costs, up to the maximum amount of funding available for that apprenticeship.
As both you and Government make a payment, this is called ‘co-investment’. This will be set at the same co-investment rate as for employers who do not pay the levy, with Government paying 90% towards the extra cost of training and assessment and you, the employer, paying the remaining 10%.