Ammar struggled after leaving school but found success through an apprenticeship. He completed a customer service apprenticeship which helped him develop skills and confidence. This led to paid work in pharmaceuticals and higher education in pharmacy. The UK government is introducing an apprenticeship levy in April 2017 requiring large employers to contribute 0.5% of their annual payroll. This will fund the goal of 3 million apprenticeship starts by 2020. The levy applies to employers with over £3 million payroll annually and provides incentives for small businesses.

1. Apprenticeship
Levy
Apprenticeship Funding Forum
apprenticeshipfunding.co.uk
AppLevyFunding
Apprenticeship Funding
Apprenticeship Training and
Consultancy Practice

2. CASESTUDY Introducing Ammar
Like many other sixteen-year-olds, Ammar left school with little aspirations,and
obscure goals. Unable to take the conventional college route, he was left facing
a dreaded question:‘Where do I go from here?’.
Fortunately for Ammar, he was referred to Pathway Group; a leading
apprenticeship training provider based in Birmingham. This recommendation
marked the beginning of Ammar’s inspiring professional journey.
An accredited apprenticeship in customer service enabled Ammar to develop
a wide range of transferable skills. This included language and communication
skills, awareness of legal policies, and cash handling. As his understanding of
the working world grew, so did his self-esteem.
Equipped with valuable qualifications and experience, Ammar eventually
found himself paid work within the pharmaceutical field. The apprenticeship at
Pathway Group has allowed him to recognise his strengths and potential, he is
now studying pharmacy at a higher level and has a clear plan for the future.
Pathway Group continues to support young people similar to Ammar, who now
shares his story with pride- and never hesitates to recommend Pathway Group
to family and friends.
98% of employers will
pay no levy, but will
be eligible to receive
vouchers to fund
their apprentices.
Did you know?

3. THE GOAL
THE APPRENTICESHIP LEVY
The apprenticeship programme first launched in
2010,andhasalreadygivenaremarkable2.9million
people the chance to learn new skills, and progress
on to paid employment. This has also helped boost
UK business.
With such productive benefits on the horizon, the
government is now committed to achieving 3
million apprenticeship start-ups by summer
2020.
Mainstream resources will tell you that the
apprenticeship levy is a ‘fundamental change to the
way apprenticeships in England are funded’- though
this is still a concept that is a cause of confusion for
many.
LEVY: An act of imposing a tax
or a fee.
Scheduled to come into effect from April 2017, the
obligatory apprenticeship levy applies to all UK
employers. Businesses with an annual pay bill in
excess of £3 million, will be required to contribute
0.5% of their bill, as an additional tax through PAYE.
An allowance of £15,000 against the levy is
available to each employer.To reiterate, those with
a pay bill of less than £3 million, will in fact pay
nothing.
This proposed levy is the government’s logical
solution to funding the desired increase in
numbers of apprentices, and improving the overall
quality of training programmes. The ultimate aim
is to raise an additional £3 billion a year, which will
be dedicated to raising the skill levels within the
UK workforce.

4. Employers will need to ensure that the necessary
systems and processes are in place to remit the levy,
as well as access funds for approved apprenticeship
training- through the Digital Apprenticeship Services
account (DAS).
0.5% levy is collected by the HMRC from employers
with a pay bill of £3m+ (minus the £15,000 allowance).
This is via the Real Time Information System, alongside
Income Tax and National Insurance Contributions.
Employers draw down the levy through the DAS, in
the form of electronic digital vouchers. The vouchers
will expire 18 months after entering the account and
as they are ring-fenced, they can only be used for
government published apprenticeship standards.
Employers will browse through an extensive online
database of accredited training providers and send
a ‘voucher code’ to the one of their choice. The
provider will reclaim the value of the voucher from
the government. Employers are able to select more
than one training provider, and are free to spend their
funding on apprenticeship training which they feel
best meet their needs.
Funding bands will be set which will limit the amount
of levy funds an employer can spend on training an
individual apprentice. The band will vary according to
the level and type of apprenticeship. To help cover any
additional costs, the government has also announced
that employers will receive a 10% top up on their
monthly payments for the financial year of 2017/18.
This means that companies will be able to ‘draw more
than they put in’.
HOW WILL IT
WORK?

5. Example: If an employer pays a £1,000 levy, then the
amount in its levy pot will actually be £1,100
To quote the Treasury: ‘From April 2017, employers
will receive a 10 per cent top-up to their monthly levy
contributions in England and this will be available for
them to spend on apprenticeship training through their
digital account’.
This new measure will come in addition to the £15,000
allowance that will also be available to levy payers.
The government will apply this very useful 10% top-up
to the funds entering the accounts of apprenticeship
levy payers.This is expected to take place on a monthly
basis.
Every business will be expected to contribute towards
the cost of an apprenticeship delivery. Smaller
businesses with a pay bill of less than £3 million will
not be required to pay through the levy, but will still
need to make a form of direct cash contribution-
typically 10% of thecost of training an apprentice.
The government will in turn, ‘co-invest’ by paying the
remaining 90% according to the most recent proposal.
WHAT IS THE
‘10% TOP-UP’?
WHAT DOES
THE LEVY MEAN
FOR SME’S?
Even with a small percentage
of employers contributing,
the government is expected
to raise £11.6 billion through
the levy
Did you know?

6. • A further incentive for businesses with fewer than
50 employees will be that the government will
cover 100% of their training costs for apprentices
between the ages of 16 and 18.
The government’s primary aim of the apprenticeship levy is for it to significantly increase the number of
apprenticeship start-ups. The amount of money that UK businesses have invested in training has fallen
consistently over the last 20 years.
What is imperative to remember is that an increase in apprenticeships is also an increase in the diversity of skill
sets, within a workforce. Having effective training programmes and employees in place will help address any
shortcomings, and help companies create a better ‘talent pool’ for themselves.
Though it has instigated a little controversy, the imposed levy is likely to have a positive impact on businesses
of all sizes.
Money left unclaimed by the organisations that
‘put in’ will be made available to smaller business
owners to claim towards apprenticeship training
via the digital vouchers- meaning that everyone
will be able to benefit.
In order to access the funding, all employers will
need to have ‘Government Standard Qualifying’
apprenticeship schemes in place, meaning that the
overall quality of apprenticeship programmes will
improve.
The 10% top-up applied to all digital accounts will
result in employers being able to draw out more
than they actually put in towards the levy.
Employers will have more control of the structure
and content of each apprenticeship: They can
recruit more staff as and when they need, and
have the flexibility to further invest in current
apprenticeships.
There will be no age limit on funding available for
apprenticeship training. However, revenue from
the levy will help fund all post-16 apprenticeships
in the UK.
The modern digital voucher will ensure that
the money secured from the levy will go to
apprenticeship organisations only.
The idea is that in return of a relatively small contribution, smaller employers will receive significant benefits
from employing apprentices. Research indicates that many employers are able to recover the entire costs of
training within just the first or second year of a programme finishing.
SME’swillnotneedtousetheDigitalApprenticeshipServicetopayforapprenticeshiptrainingandassessment
until at least 2018, when the government is expected to issue further advice.
• The government will also pay 100% of the costs
where a business of fewer than 50 employees
recruits apprentices aged 19-24, who have
previously been in care or hold a Local Education,
Health and Care Plan.
In simple terms, the only way for levy paying businesses to recoup their levy, will be by investing in
apprenticeship training. Money left unclaimed by the organisations that ‘put in’, will then be made available
to smaller businesses, for them to use on the scheme instead.
BENEFITS OF THE
APPRENTICESHIP LEVY

7. Everyemployerwillneedtochoosethetrainingthey
would like the apprentice to receive throughout
their apprenticeship. Prior to the levy taking effect
in April 2017, companies will be able to do this via
the Digital Apprenticeship Service.
There are 2 different types of apprenticeship
training:
Although setting up or being a part of a trailblazer
group can be time consuming, it can add a great
deal of value to a company and its workforce. If the
job role an employer needs is not covered by any of
the standards that are approved or in development,
there may be potential for them to support the
progress of a new trailblazer group.
Those wanting to get involved are made aware
that each trailblazer group should include a wide
range of employers (minimum of 10), who are
committed to taking part in the development of
the apprenticeship standard.
Professional bodies are also involved in the process
of developing standards, as a well as training
providers so that they can contribute ideas from a
delivery perspective.
As the process of creating apprenticeship standards
can be an energy and time-consuming one,
trailblazer facilitators will generally be at hand to
provide further information and support.
It is recommended that employers obtain as much
information about trailblazers beforehand as all
new apprenticeship standards will need to be
developed through the employer-led trailblazer
model. By the year 2017-18, this model will become
standard across all sectors.
The idea is to encourage employers to be at the
forefront of the development of apprenticeships
and learning. This will help them create a skilled
workforce, that is in line with their own business
andindustryrequirements.Boththeapprenticeship
levy, and trailblazer groups can enable this.
APPRENTICESHIP
STANDARDS & TRAILBLAZERS
APPRENTICESHIP STANDARDS: These are the
new type of apprenticeships developed my
employers. Each standard covers a specific job
role and outlines the core skills, knowledge,
and behaviours an apprentice will need in
order to be fully competent within their job
role. The standards are created by employer
groups known as ‘trailblazers’.
APPRENTICESHIP FRAMEWORK: Typically, this
involves a series of work-related vocational
and professional qualifications, with practical
workplace and classroom style teaching. The
apprenticeship frameworks will gradually be
phased out by the government between now
and the year 2020.
Celebrity chefs Gordon
Ramsey and Jamie Oliver both
started out as apprentices
in the catering industry, and
eventually went on to open
their own restaurants.
Did you know?

8. HOW CAN EMPLOYERS
PREPARE FOR THE LEVY?
Businesses should consider a short-term strategy,
in order to make the transition towards the
apprenticeship levy as simple, and as effective for
them as possible. It is useful to remember that
levy paying employers will be able to familiarise
themselves with the new Digital Apprenticeship
Service from January 2017.
• Employers can make a start by updating their
businesses’payrollsoftware,totakeintotheaccount
the new rule exempting organisations from Class 1
National Insurance Contributions for apprentices
under the age of 25.
• Employers can make a start by calculating their
levy payments. It is imperative to include the salary
costs of apprentices in order to get a clear idea of
the net cost to the business.
The minimum wage is £3.30 for apprentices aged
16-18, and those 19 years or older during the first
year of the apprenticeship. Following this, the
standard National Minimal Wage applies.
• Employers will also need to consider the additional
costs associated with managing and developing
apprentices.
• Although the levy payments are large, they may
not justify launching apprenticeships across all
areas of a large business. It is recommended to
launch a scheme within one specific area of a
business that is facing a skills gap. Consider where
apprentices could fit into a company and add value.
• Prior research about training providers is key.
The new system and resourcing demand from
employers will mean that providers will be facing a
challenge of their own. Businesses will need to act
quickly and secure the required tools for delivery,
for their own training provision.
• It may be a good idea for employers to review all of
their current staffing, as they may have a number of
staff members already working for them who would
benefit from further training. In many cases, these
employees can be trained via the apprenticeship
programme- saving companies a lot of time and
effort in recruiting new candidates.
If you have a finance team: consult with them.
Calculate your levy payments.
The average
apprenticeship is said to
improve productivity by
£214 a week.
Did you know?

9. FAQ’s
How does the apprenticeship levy impact on
group companies and charities?
In the event of a group of employees being connected,
they will still only be able to use one £15,000 allowance.
Companies will then need to decide what proportion of
the levy allowance each employer in the group will be
entitled to.This decision must be taken at the beginning
of the tax year and will remain fixed for that tax year.
How do employers create an account to access
their funds?
Online tools for employers will be made available via
the digital apprenticeship service (DAS) over the next
coming months. Employers will be able to register and
create their account from January 2017. Following this,
they will be required to verify their PAYE schemes and
link them to their accounts.
When do the funds appear in the digital account?
The apprenticeship levy will be introduced on 6 April
2017. The first time eligible employers will have to
declare their liability to HMRC will be in May 2017 for
levy due on their April payroll. Levy-paying employers
will be able to see corresponding funds in their digital
accounts shortly after their final declaration to HMRC, so
after 22 May.
When do the funds in the digital account expire?
Funds will expire 18 months after entering an employer’s
digital account, if not spent on apprenticeship training-
This also applies to the‘top-ups’entering the account.
How do levy-paying employers use the funds in
the digital accounts to purchase training?
Funds will enter an employer’s digital account each
month as they pay the levy, they will not need to
have enough funds to cover the entire cost of the
apprenticeship training from the start.
Employers will be able to purchase training through the
new DAS from May 1st 2017. Once they have purchased
apprenticeship training from a particular training
provider, monthly payments will be automatically
taken from their digital account and sent to the chose
provider. This spreads the cost over the lifetime of the
apprenticeship. The new system will pay providers
one month in arrears for training they report has been
delivered.
What if there are not enough funds in the digital
account to cover training costs, for levy-paying
employers?
This is where a‘co-investment’takes place. Where a levy-
paying employer does not have enough funds in their
digital account to purchase apprenticeship training,
they will be asked to make a contribution towards the
extra cost and pay this directly to the training provider
(as opposed to via their digital account). Employers will
be able to spread this contribution over the lifetime of
the apprenticeship and agree a payment schedule with
their provider.
Are levy-paying employers able to stop payments
from their digital account?
Yes, they are if:
• The apprentice stops their training.
• The apprentice takes a break from training.
• The employer hasn’t received the service they agreed
with the training provider.
How will the government fund apprenticeships
that start before the levy is introduced?
Apprenticeships that have started before the first levy
payment is taken (April 2017), will continue to be funded
under the current model. Vouchers cannot be used to
fund apprentices who start apprenticeships before the
start date of the levy taking effect.
Apprenticeships can help
reduce staff turnover,
by increasing employee
satisfaction and loyalty.
Did you know?

10. DECEMBER 2016:
There will be information about further employer guidance from
HMRC on how to calculate and pay the apprenticeship levy.
JANUARY 2017:
Levy-paying employers can establish and familiarise themselves
with an online account, with the Digital Apprenticeship Service.
IMPORTANT DATES

11. APPRENTICESHIP: Government funded work-based training programmes,
that combine job training with nationally recognised qualifications.
CO-INVESTING: Where an employer and the government both make a contri-
bution towards the funding of an apprenticeship.
DAS: Digital Apprenticeship Service. This is the digital interface designed to
support the uptake of apprenticeships. It is primarily aimed at employers, with
information coming from a range of different sources, including learning pro-
viders and apprenticeship assessment organisations.
HMRC: Her Majesty’s Revenue and Customs. A non-ministerial department
of the UK government: responsible for the collection of taxes, the payment of
some forms of state support, and the administration of other regulatory re-
gimes- including the national
LEVY: An amount of money (mostly in the form of tax) that you have to pay to
a government or organisation.
PAYE: Pay-as-you-earn. A withholding tax on income payments to employees.
PAY BILL: Based on total employee earnings, subject to Class 1 secondary na-
tional insurance contributions.
SME’s: Small and medium sized enterprises.
TRAILBLAZER: A group of employers who work together to design new ap-
prenticeship standards for occupations within their sectors.
GLOSSARY

12. Pathway Group
Amington House, 95 Amington Road, Tyseley, Birmingham B25 8EP
Tel: 0800 955 0870 / 0121 707 0550
Email: info@pathwaygroup.co.uk
Web: www.pathwaygroup.co.uk
SafarazAli
Pathwaygroup
SafarazAli
Pathwaygroup
Safaraz
The Pathway Group
CEO & Founder of
The Pathway Group
safaraz@pathwaygroup.co.uk
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