How will the new funding model work?

There have been many reports, papers and policy notes describing the intricate details of how the levy will work. But put simply, the apprenticeship levy scheme works like this:

  • You create an employer account with the Digital Apprenticeship Service (DAS) (available from January 2017)
  • You pay a levy equal to 0.5% of your payroll, monthly to HMRC
  • Government adds 10% to the amount you pay each month (known as the ‘top-up’)
  • Your DAS account accumulates monthly credits (2+3 above)
  • You plan an apprenticeship scheme (NSAN can help you with this)
  • Choose your apprenticeship standards or frameworks
  • You contract approved training providers to deliver your apprenticeship training You agree a price for the delivery of the apprenticeships with your lead provider, but the values have higher and lower caps that are determined by government –  known as ‘funding bands’
  • Your chosen lead provider delivers your apprenticeship training (to an agreed specification) and registers your apprentices with the Skills Funding Agency (SFA)
  • If you are satisfied with the training you pay the provider digitally for their services via the DAS account
  • Your apprenticeship levy continues to accrue monthly

That’s it. There is still some work being done on the fine details of the mechanisms, which will be updated on this website.  

There are a couple of other things that companies need to know:

  •  If you use up your levy, of have insufficient funds in your DAS account to cover the costs of your training (because you have more apprentices than your levy will fund) government steps in and co-funds the additional apprentices.
  • Co-funding is where government pays 90% of the agreed training costs and you, as the employer, only pay 10% (that’s 10% of the agreed funding band for the specific apprenticeship being delivered)
  •  All employers have a £15,000 allowance
  • If you are not a levied employer because your payroll is less than £3m annually then all of your apprentices are co-funded from day one.

There are some complexities to all of this. If you would like us to talk you through the process is more detail get in touch your Operations Manager.  If you are not a member, contact us to find out what benefits membership could bring to your organisation.