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The Government has changed the way apprenticeships are funded in England, which includes the introduction of an employer levy. The levy is being paid by employers with an annual pay bill of £3million or more from April 2017. The levy is calculated at 0.5% of an employer’s annual wage bill over the £3million and is taken monthly via PAYE. These levy payments are then translated in apprenticeship vouchers for employers to spend on apprenticeship training and include a 10% contribution from Government. Employers spend their vouchers through a digital apprenticeship service account.

The introduction of the levy is part of the Government’s apprenticeship reforms in England, which aim to put employers in the driving seat. The levy will help the Government double investment in apprenticeships by 2020 from 2010 levels, to £2.5bn. The new system will put employers in control of who they buy their apprenticeship training from. The Government has an ambition to see 3 million new apprenticeship starts between 2015 and 2020 (this is an increase of 1 million since the previous government).

Apprenticeship vouchers are what levy-paying employers will use to buy their apprenticeship training and cover the cost of End Point Assessment (so the apprentice can achieve their apprenticeship when ready).

Each employer will have a digital Apprenticeship Service account, which will hold the value of an employer’s vouchers and allow them to select the training they want to buy. Vouchers are paid into the employer’s account one month in arrears of the levy payment being made to HMRC via PAYE. From the point at which the vouchers appear in the employer’s account they have two years to spend them, after which the Government will take them back.

The Government plans for employers to be able to pass-on up to 25% of their annual value of funds entering their account to other employers to use. More information and guidance about the levy and how funding works is available from the Education and Skills Funding Agency