Published on Wednesday, March 20, 2019

Levy transfer limit increases to 25%

Rule change means increased flexibility for levy-payers and funding boost for smaller firms 

When it was introduced in 2017, the Apprenticeship Levy rules allowed for 10% of levy funds to be passed down through the supply chain.  That figure will now be increased to 25%. 

Any large employer that pays the apprenticeship levy can pass on funds.  Transfers are likely to take place between firms that currently work together or are within the same industry.  Unspent monies can also be passed to an approved Apprenticeship Training Agency. 

Boost Access and Plug Gaps 

The increased limit of 25% will come into operation in the new financial year beginning April 2019.  The move is set to boost access to apprenticeships and plug skills gaps.  Smaller firms receiving funds will be able to spend it on new apprentices. The donating firm makes a pledge to fund the apprentice for the full length of the course. 

Industries that are particularly set to benefit include construction, manufacturing and logistics.  In these industries, subcontracting is the norm, and the skills requirement is often handed over to suppliers. 

Small Firms Knowledge Base 

If you are a small non-levy paying firm and want to take advantage of the scheme to receive funds here is what you need to know: 

  • Transferred funds can only be used for apprenticeship training and apprenticeship assessment
  • Your apprentice will have to be on an approved apprenticeship standard
  • Both you and the donating organisation will require an account with the Apprenticeship Service
  • If the apprenticeship stops then funding will cease
  • You will never have to pay any funds back to the donating employer
  • If funds run dry the government will co-invest in the remaining cost to the tune of 90% but you will have to make up any shortfall
  • If your funds come from a training provider they are not allowed to deliver the training for the funded apprenticeship
  • A transfer fund cannot exceed the amounts set out in the funding band maximum standards ie the guidelines on what apprenticeships and apprentices should cost

Larger Firms Need To Set Out Plans

Large firms that are planning to transfer funds need to consider the following:

  • The setting out of a clear financial forecast
  • The funding should be the entire cost of the apprenticeship
  • Compliance with the funding rules around transferring apprenticeship funds
  • If you are sending funds you cannot then receive funds from a third party to pay for your own apprenticeships

Savvy Firms See The Benefits

Siobhan Saunders, Chair of The Liverpool City Region Apprenticeship Hub has welcomed the move.  She explains: 

“Increasing the transferable funds to 25% of a large employer’s levy is great news with positive repercussions for Liverpool City Region.  Funds are less likely to lie idle and more individuals will be given the chance to complete an apprenticeship. Savvy firms are already seeing the levy as an investment.  And this latest announcement means that larger firms get more flexibility on sourcing skills from within their supply chain as well as developing them in-house.  It’s a win-win for smaller firms too who will become more sustainable thanks to funds available to invest in staff.” 

The rule change is likely to result in more SMEs taking on apprentices. Interested employers can find more information on the Government website here or email the Hub team apprenticeshiphub@halton.gov.uk

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