Oct 31ST

Apprenticeship Changes

Further information and clarification on the changes to apprenticeship funding was announced last week which will affect all employers regardless of size.

The apprenticeship levy will be in force from 6th April 2017 which will require all employers with a pay bill over £3 million each year to invest in apprenticeships via an apprenticeship levy which will be set at 0.5% of  employees’ earnings that are subject to Class 1 National Insurance contributions less an allowance of £15,000.  This will be collected by HMRC through the PAYE system.

In order to access this money for apprenticeship training, employers will need to set up a digital apprenticeship account.  The levy funds can be directed through this account to fund apprenticeship training on a recognised apprenticeship framework or standard delivered by an approved training provider.  The government will add an additional 10% to the funds in your digital account towards apprenticeship training.  The length of time available to spend these funds on apprenticeship training has been extended from 18 to 24 months and funds will enter and leave the account on a rolling monthly basis.   There will also be the option to transfer up to 10% of digital funds to other employers in a supply chain from 2018.  There is an online calculator available that can help model levy payments and how these funds can be invested in apprenticeship training. Moulton College is happy to support any employer to better understand how to plan apprenticeship training carefully to maximise the benefit from levy payments. 

However the changes recently announced does not only affect large employers.  Employers not affected by the apprenticeship levy will not need to use the digital apprenticeship service until at least 2018 but from May 2017 all employers will be asked to contribute to the cost of apprenticeship training.  The level of this contribution has been set at 10% of the cost of the training with the remaining 90% of training costs being funded by the government.  This will increase to 100% government funding for employers with fewer than 50 employees who take on a 16-18 year old or 19-24 year old care leaver or a learner with an education and health care plan.  There will also be an incentive payment of £1000 for employers of this group of learners to cover the additional support costs required for this group of apprentices.  There will also be additional funding for providers to support apprentices living in the most deprived areas to try to ensure apprenticeships remain accessible for all young people.

These changes will only affect new apprenticeship starts from May 2017.  If you take on an apprentice before this date then they will be funded using the current system for the duration of their apprenticeship training.  Currently Moulton College does not charge any employer contribution for intermediate or advanced apprenticeships regardless of learner age and there is still time to recruit an apprentice under the current rules.

The apprenticeship team at Moulton College are available to work with any employer regardless of size to discuss the benefits that employing an apprentice could bring your business and to support you throughout the process.  Apprenticeships can help boost the skills of your workforce and help to increase productivity.  If you would like to discuss how apprenticeships could support your business, please contact the apprenticeship team on apprenticeships@moulton.ac.uk or on 01604 673575.