Update in the Funding policy from 1 August 2020 as Government puts plans in place to support Apprenticeships:

Start date
The start date for the updated apprenticeship funding policy is 1 August 2020. In line with current policy, we will fund apprenticeships started on or after this date according to the apprenticeship funding rules in place on that date. This will apply to all employers, both those paying the levy and those who do not. Any apprenticeships that started before this date will continue to be funded under the rules that applied when the apprenticeship started.

Information for employers who pay the apprenticeship levy

Determining the funds that enter accounts
The amount of funding that an employer paying the apprenticeship levy can access is linked to the value of an employer’s levy contributions, the proportion of employees living in England plus a government top-up. Employers access government funding for apprenticeships through their apprenticeship service account.

We calculate the amount of funds each employer will have available to spend in England using data that HMRC hold about the home address of their employees. HMRC work out what proportion of each employer’s pay bill is paid to employees living in England for each PAYE scheme.

Employers continue to receive a 10% top up to monthly funds entering an account.

The level of funding that enters an employer’s account each month is calculated as:

  • Monthly levy paid to HMRC
  • Multiplied by the proportion of the employer’s pay bill paid to their workforce living in England
  • Plus, a 10% government top-up on this amount

When employers first set up an account on the apprenticeship service, funds will enter their accounts immediately. These funds will be based on employers’ valid levy declarations to HMRC to date, up to a maximum of two years in arrears. After this, funds will enter accounts monthly, as described above.

Information for employers who do not pay the apprenticeship levy

Co-investment
Employers who do not pay the levy, and those who want to invest more in apprenticeship training than they have available in their levy accounts, benefit from significant government funding to support their commitment to apprenticeships. These employers must make a financial contribution, a ‘co-investment’, alongside this government funding.

All co-investment payments are made directly to the training provider. An employer cash contribution towards the costs of training is an essential part of apprenticeship reforms, designed to increase quality and employer engagement.

For apprenticeships that start between 1 August 2020 and 31 July 2021 the rate of co-investment is 5% of the total price of the apprentice’s training, with the government covering the remaining 95% of the cost up to the funding band maximum.

Small Employer Waiver
We want to continue to support smaller employers to take on those who need more support. Employers with fewer than 50 people working for them are able to train, at no cost, those aged 16-18 or those aged 19-24 who have previously been in care or who have a Local Authority Education, Health and Care plan. These employers are not required to contribute the 5% co-investment; instead, the government will pay 100% of the training costs for these individuals up to the funding band maximum.

Additional payments for employers

Support for young apprentices aged 16-18
We are committed to an apprenticeship programme that supports young people into quality apprenticeships and we recognise that for employers who take on young apprentices aged 16-18 years old, there are some additional costs associated with supporting them in the workplace. For example, research on apprenticeships for 16-18-year olds suggests that these apprentices can require significantly more supervision and pastoral care.

When employers take on a 16-18-year-old on an apprenticeship standard, they receive £1,000 to help meet the extra costs associated with this. This will be paid to employers in two equal instalments at 90 days and 365 days. These payments are made to employers via their training provider, who will pass the money on. These payments come direct from the government and will not be deducted from an employer’s account.

Employers who benefit from the small employer co-investment waiver will also receive these payments.

These payments are separate from, and therefore in addition to, the incentive payments for hiring a new apprentice, which are paid directly to the employer through the apprenticeship service.

Support for care leavers and those who have a Local Authority Education, Health
and Care plan.

Apprentices aged 19-24 who have previously been in care or who have a Local Authority Education, Health and Care plan may need extra support and we recognise this can represent an extra cost to employers.

Employers who train an apprentice who is aged 19-24 and has previously been in care or who has a Local Authority Education, Health and Care plan, will receive £1,000 to help with these additional costs in the same way as the payment for 16-18 year olds.

Employers who benefit from the small employer co-investment waiver will also receive these payments.

These payments are separate from, and therefore in addition to, the incentive payments for hiring a new apprentice, which are paid directly to the employer through the apprenticeship service.

Incentive payment for hiring a new apprentice
An incentive payment for will be made to employers who hire an apprentice between 1 August 2020 and 31 January 2021.

The apprentice must be a new employee to the business, have a contract of employment start date between 1 August 2020 and 31 January 2021 (inclusive) and must not have been employed by the employer within the six months prior to the contract start date.

Claims can start to be made by employers in relation to these apprentices from 1 September 2020. Those claims must be made through the apprenticeship service.

There will be two levels of payment based on age. For apprentices aged 16-24 the payment will be £2,000, and for apprentices aged 25 or over the payment will be £1,500. The payment will be made directly to employers in two equal instalments, where the apprentice is still in learning at day 90 and day 365.

There will be no limit on the number of incentive payments that an employer can claim for apprentices eligible to receive funding, provided each apprentice meets the criteria, including being a new employee.

To see the full Apprenticeship funding in England From August 2020 policy visit: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/900154/Apprenticeship_funding_in_England_from_Aug_2020_Policy_Document_FINAL.pdf