The apprenticeship levy
The apprenticeship levy requires large employers to contribute to apprenticeship funding, and is part of a wider series of reforms to the apprenticeship system.
From May 2017, employers with an annual pay bill of more than £3 million pay 0.5% of their total pay bill (NI-able gross pay) towards the apprenticeship levy. There is a ‘levy allowance’ of £15,000 per year. This means that the total amount employers need to pay is 0.5% of their pay bill, minus £15,000.
Example: An employer with an annual pay bill of £5,000,000 will need to spend £10,000 on the levy:
- levy sum: 0.5% x £5,000,000 = £25,000
- subtracting levy allowance: £25,000 - £15,000 = £10,000 annual levy payment
Levy payments must be paid each month, based on the employer’s monthly pay bill, and will be paid through the PAYE process in the same way that Income Tax and NI contributions are paid.
From 6 April 2017, employers will need to tell HMRC how much Apprenticeship Levy they owe each month from the start of the tax year. Employers will use the Employers Payment Summary (EPS) to report their Apprenticeship Levy liability.
‘Community schools’ are treated as part of the local authority, for the purposes of paying the levy, and are required to pay 0.5% of their total pay bill towards the levy. This applies regardless of the school’s total pay bill, as the local authority’s overall pay bill is greater than £3 million. LBH/HLT have worked with payroll providers to pay as well as report the levy so there is no action needed for community schools.
Voluntary-aided schools, foundation schools, free schools and academies are only required to pay the apprenticeship levy if their total pay bill is greater than £3 million.
Schools who pay the levy will be able to access an equivalent amount to what they have paid, plus a 10% top-up from government, through a new digital apprenticeship service account, held by Hackney Council. Funds in this digital account may only be used to pay training providers to deliver apprenticeship training.
For more information view the Government guidance on the levy.
Accessing funding for apprenticeship training
All levy-paying voluntary-aided schools, foundation schools, free schools and academies can follow the relevant information and guidance on the process on the register to manage apprenticeship funds page of gov.uk. Registration for the apprenticeship service has been open since 1 April 2017.
All community maintained schools or any other schools paying the levy were previously instructed to set-up their own digital account, as part of the new digital apprenticeship service.
Hackney Council and Hackney Learning Trust have recently been informed by the ESFA/National Apprenticeship Service that, following a rule change, ‘community’ schools linked to Hackney Council should not have their own digital apprenticeship accounts. The reasoning we have been given by the ESFA/National Apprenticeship Service for this change is that:
“local authority maintained schools should not be registering an apprenticeship service account independently or as a connected company (public bodies cannot be connected companies) as this can only done by legal entities and local authority maintained schools are not legal entities for the purpose of the apprenticeship levy.”
This means that these schools must now access funding for apprenticeship training costs through Hackney Council, and not through their own accounts.
‘Community’ schools are defined as voluntary-controlled, and all other maintained schools. This does not apply to voluntary-aided schools, foundation schools, free schools and academies.
In order to access apprenticeship funds you will first need to set up a Government Gateway Account, if you have not already. This is where you will need to activate your school's PAYE scheme, if you have not already done so.
There are two sets of instructions, depending on whether you have already set up a digital apprenticeship account or not:
Please note that the digital apprenticeship account is a separate service/website from the government gateway. Schools who have not yet set up a digital apprenticeship account should not do this, as funds will be accessed through the council's digital apprenticeship account.
Please email email@example.com for any assistance.
Levy funds can only be used to pay for training for apprentices employed directly through your school’s PAYE scheme. For apprentices employed by a staffing agency or ATA (apprenticeship training agency), the training must be paid for by the agency. They may charge you additionally for this, which means you will have less budget available for salaries.
How much schools can spend
- Your total levy allowance is the equivalent of your levy contributions (0.5% of your pay bill) plus a 10% top-up applied by government.
- So – for example – if your school’s annual pay bill is £1.5 million, your annual levy allowance will be £8,250. This is calculated as:
0.5% of pay bill = £625 per month, £7,500 per year
10% top-up = £750 per year
levy contribution (£7,500) + 10% top-up (£750) = £8,250
- Apprenticeship qualifications range in cost from £2,000 (e.g. Level 2 ‘Supporting Teaching and Learning in Schools) to £27,000 for the most expensive degree level apprenticeships. The cost of training is split over the lifetime of an apprenticeship – so a £27,000 4-year degree apprenticeship would cost £6,750 per year.
- Therefore, our example school with a levy allowance of £8,250 per year would be able to afford to pay, over the course of 4 years, for 1 degree-level apprenticeship, and 3 Supporting Teaching & Learning Level 2 apprenticeships (typically 12-18 month contracts).
- We will provide schools monthly with an updated spending allowance, based on the total income linked to individual schools’ PAYE schemes.
- Schools can agree to pool their funds, even if they are not federated schools. If you would like to do this, please notify us at firstname.lastname@example.org.
- If your school is approaching its spending limit, we will contact you to advise you. In some cases, it may be possible for you to access additional funding from the council’s levy funds, but this will be dependent on the available surplus (e.g. where schools are not spending their full allowance), and whether the additional spend is for upskilling or new apprenticeships.
How to recruit an apprentice
The Council's apprenticeship programme is aimed at creating employment opportunities for young people in Hackney. The Council employs over 100 apprentices, and encourages all partners to meet the same criteria as for council apprentices, given below:
- Target young people aged 16-24 (for apprenticeships at level 4 and above, the age criteria and salary may be increased)
- Target Hackney residents, school leavers or care leavers for whom the council is a corporate parent
- Paying apprentices the London Living Wage. We recognise this may not be realistic for all schools, and therefore our minimum recommended salary is £7ph
If you would like to hire a new apprentice, or offer an apprenticeship qualification to an existing member of staff, please contact email@example.com or alternatively, contact the HLT OD HR business partner (Tatiana Pavlovsky), and we will be able to help you identify a suitable qualification and training provider, and access funds through the council’s digital apprenticeship account. Please note that these guidelines apply only to maintained schools, and not to Voluntary-aided schools, foundation schools, free schools and academies.
Apprentices will typically be new hires but the apprenticeship levy funds can also be used towards existing employees looking to complete a qualification. In the case of a new hire, we suggest the following recruitment process:
- Identify and define potential vacancy
- Identify a suitable vacant or new post
- Seek support, if required, from the HLT Organisational Development Business Partner to discuss potential apprenticeship roles
- Follow the school procedure to establish/replace a post
- Discuss and identify an appropriate qualification
- Identify local training providers available to deliver the selected training
- Plan the recruitment process and establish a rough timeline
- If a training provider has already been selected, they may be asked to deliver the initial stages of recruitment – sifting applications, testing candidates and shortlisting.
- Finalise the JD with the hiring manager. See below for JD templates for Administration, Early Years and teaching assistant apprenticeships
- Finalise detailed timeline for recruitment
- Hiring manager finalise interview questions. Ensure interview questions are appropriate for apprentices
- Advertise the position. Apprenticeships can be advertised on the HLT and council website for no fee. Other usual channels can also be used. If the training provider delivers the initial stages of recruitment, they will be required to post the vacancy on the national apprenticeships service website
- Initial applications and any testing required take place
- Applications are screened and candidates are shortlisted for interview
- Feedback is given to unsuccessful candidates (referral to training/employability services where appropriate)
- Individual interviews take place
- Candidate is selected
- HR and hiring manager to carry out pre-employment checks and referencing
- Hiring manager to finalise training programme and provider and confirm enrolment / start date (if this has not been done already)
- Apprentice to sign apprenticeship agreement
- Sign the employment contract - note this varies from standard employment contracts
- Apprenticeship begins
- Full induction
- Apprentice enrolled in training. This will usually take place within the first month of the apprenticeship, once the apprentice has settled in
- Employment is subject to 6 month probation period
Good practice - dos and don'ts
Below are some areas to consider:
- Job description: This should be written without jargon, and should not ask for prior experience
- Interview: You should be looking for potential/aptitude, not prior experience. An assessment is a good idea
- Salary: Good quality apprenticeships pay at least £7 per hour. The apprenticeship minimum wage is £3.50 per hour, but paying this amount is likely to impact the quality of applicant you attract, and the likelihood of them staying with you
Upskilling for existing staff
Schools can use their apprenticeship levy funds to pay for training for existing staff. Here are some things to consider:
- Only approved apprenticeship qualifications can be paid for using levy funds. See below for more information on approved qualifications
- All approved apprenticeship standards require that the learner spends 20% of their paid working hours on ‘off-the-job training’. See further guidance
- Staff must study a qualification linked to their current job. For example, a Business Manager could not complete a Teaching apprenticeship qualification
- Any spending must be met from your school’s spending allowance. You may wish to create an internal process to assess individual applications from staff. For example, you could choose to prioritise spending which will benefit the school (e.g. by addressing identified skills gaps) as well as benefit the individual professional development of the member of staff
Qualifications and training providers
When you set up an apprenticeship, you need to select a suitable qualification. This needs to be an approved apprenticeship ‘framework’ or ‘standard’.
The Apprenticeship Programme Team (firstname.lastname@example.org) or alternatively, the HLT OD HR business partner (Tatiana Pavlovsky), can help you identify a suitable framework or standard as well as a training provider.
Alternatively, schools can select suitable qualifications from the approved national lists. There are two types of apprenticeship qualifications:
- Frameworks: These are the older form of qualifications, and are being phased out by 2020. View a full list of approved frameworks
- Standards: These are the new form of apprenticeship qualifications, designed by employers. View a full list of approved standards
Here is a list of some approved frameworks and standards that schools may wish to consider:
|Business and Administration||3||£5,000||12 months|
|Property Maintenance Operative||2||£9,000||18 months|
|Teaching Assistant||3||£5,000||18 months|
|Teacher degree apprenticeship||6||£9,000||18 months|
|Team Leader/Supervisor (teaching specific)||3||£5,000||12 months|
|Senior Leader Masters Degree Apprenticeship (education specific)||7||£18,000||24 months|
|Early Years Educator (in development)||3||TBC||12-18 months|
|Early Years Senior Practitioner (in development)||5||TBC||TBC|
|Early Years Lead Practitioner (in development)||6||TBC||TBC|
Selecting a training provider
We will support you to identify a suitable training provider and access funds to pay them through the council’s digital apprenticeship service.
Schools are welcome to identify their own providers, but please note that contracts and payment will need to be arranged through the council, using our digital apprenticeship account. If you are researching providers, you should consider:
- their track record in delivering your chosen qualification
- their achievement rates
- their Ofsted rating
- whether they are on the newly formed register of apprenticeship providers