The new Apprenticeship levy can be complex and there are some potential pitfalls you should be aware of to ensure your business doesn’t lose out.

Any digital training funds (vouchers) earnt will expire after 24 months.

As an employer you will have up to 24 months (not 18 as was originally suggested) to spend your training funds.

But don’t worry, the oldest funds will expire first and your Digital Apprenticeship Account will give you plenty of notice before any disappear.

You can’t use these funds to pay for training of apprenticeships started before May 2017

Existing Apprenticeships will continue to be funded by government under the existing contracts and agreements.

Spending must be with an approved training provider and assessment organisation

You can find out which training providers have been approved and offer the apprenticeships you want on the ‘Apprenticeships’ section of the government Skills Funding Agency website. This database lists approval rankings and contact details for every government-approved training provider.

City College Brighton and Hove is a GRADE 2 ( GOOD)  Ofsted accredited training provider.

You cannot use your digital training funds to pay for training costs above the funding band for that apprenticeship.

For example –

  • The maximum funding band for a Construction Site Management Apprenticeship (level 6) is £12,000.
  • Levy-paying ‘Construction R Us Ltd’ has negotiated a fee of £13,000 to train an existing employee as an apprentice because they want extra training.
  • They can use £12,000 from their Digital Apprenticeship Service Account but must fund the additional £1,000 themselves and pay it direct to their training provider.

You pay a levy on your entire UK payroll but the value of the vouchers you receive in your account is based on the percentage of your employees that live in England.

So, if your total payroll is £6 million but only 50% of your workforce lives in England, then you will pay £15,000 and receive £8,250 in digital training funds. The difference goes into general taxation and helps fund Scottish and Welsh Apprenticeships.

0.5% x £6,000,000 = £30,000

less £15,000 allowance = £15,000

x 50% = £7,500

+ top up from government of 10% = £8,250

The Digital Apprenticeship Service website offers an online tool to help you estimate what funding you are likely to get.

You can only use the funds on apprentices whose normal place of work is England.

The government is working with Scotland and Wales on reciprocal funding arrangements for employees who live in England, but who may work elsewhere in the UK.

Digital funds and government funding received through the apprenticeship levy cannot be used for:

  • apprentice wages
  • apprentice travel and subsistence costs
  • managerial costs
  • traineeships
  • work placement programmes
  • the costs of setting up an Apprenticeship programme

When a group of companies are connected, they will only be able to use one £15,000 levy allowance.

However, this allowance can be split between all businesses in the group but this must be decided and notified to HMRC before the start of the tax year. You can’t change the split for the rest of the tax year.

If a company connects with a group of companies that pay the levy, the group company will immediately be liable to pay the levy on 100% of the increase in the payroll.

To find out how your business can avoid the potential pitfalls of the Apprenticeship Levy, contact to speak to one of City College Brighton and Hove’s dedicated advisors.