About the apprenticeship levy

Apprenticeships and the Apprenticeship Levy: A Skills Revolution

About the apprenticeship levy

In 2016, the UK Government acknowledged a growing skills gap and a lack of employer investment in vocational training. In 2017, to boost the country's economy and support businesses in upskilling their workforce and increasing productivity, the Government introduced the Apprenticeship Levy. The focus of the levy is to encourage employer spending on vocational training to upskill or reskill staff and improve both the quantity and quality of apprenticeships available to UK citizens.

Since 6 April 2017, all UK employers in the public or private sector with a pay bill of over £3 million contribute to the apprenticeship levy, paying 0.5% of their annual pay bill (minus a £15,000 allowance). Organisations can then access the funding, with an additional 10% top-up from the UK Government, to pay for apprentice training and assessment through a registered training provider and assessment organisation.

With these fundamental shifts to the funding model and their implications for employers' interactions with the apprenticeship system, it is essential for employers to better understand how these programmes can be deployed to bring maximum benefit to the business.

What are apprenticeships?

Apprenticeships offer organisations much more than the levy alone. They provide an opportunity to drive productivity and engagement, playing a vital role in a successful wider people strategy. Apprenticeships are work-based vocational development programmes designed to upskill or reskill employees at every level within the organisation. While traditionally apprenticeships have provided structured routes into skilled work for young people entering the workplace, recent changes in government policy mean that apprenticeships now offer a structured route for the whole workforce to learn while they earn, empowering staff to tap into their potential.

There are hundreds of apprenticeship programmes available across many industries, which can be viewed on the Institute for Apprenticeships website. These apprenticeships have been designed by employers in partnership with leading education and learning organisations, like Arden University. There are apprenticeships for almost any job role. Thus, all organisations can access funding for apprenticeships through the levy to develop diverse workforces with the skills they need to achieve their goals. When searching on the Institute for Apprenticeships website, employers can choose the 'apprenticeship standard' that best suits the learning their employee or employees require, which is broken down into knowledge, skills, and behaviors.

Apprenticeship vocational training offers many benefits to businesses. It gives employees a better hands-on understanding of roles and tasks, producing more competent staff as employees become more confident in their job roles. This, in turn, increases productivity and profitability. The incentives provided by the government through the apprenticeship levy, combined with the quality of these structured programmes, make apprenticeships a very cost-effective way to transform the workplace and support the skills required to meet business goals.

What is the Apprenticeship Levy?

The Apprenticeship Levy is a tax that all employers with a payroll over £3 million pay. Employers can utilise this levy to fund apprenticeship training programmes for employees at all levels. If you're a non-levy paying business, you can share the cost through government-employer 'co-investment,' meaning you'll only pay 5% towards the cost of the apprenticeship. Thus, whether you are a large levy-paying organisation or a Small Medium Enterprise, all employers in England are highly incentivised to harness the power of the levy to attract and develop staff, support social mobility, and boost productivity. In summary, the apprenticeship levy backs businesses to create good jobs and increase the earning power of people throughout the UK with investment in skills, industries, and infrastructure.

For more information on the apprenticeship levy, please see Arden University's

Levy guide