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/Hackney Education 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. Non-levy paying employers (i.e. voluntary-aided, foundation, free schools and academies/multi-academy trusts with an annual pay bill below £3m) can access 95% funding from government towards the cost of training apprentices, and can also apply for 100% funding from Hackney Council through the Hackney Apprenticeship Network.
'Community' schools can access their apprenticeship levy funds through Hackney Council. ‘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. 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.
In order to access apprenticeship funds you will first need to register your school online for the government gateway PAYE for employers service.
- If you already have a government gateway/online HMRC account, log in and ensure your 'PAYE for employers' service is activated. If it is not, you will need to select 'PAYE for employers' and enter your school's PAYE information (see below). You will be sent an activation code in the post by HMRC
- If you do not have a government gateway/online HMRC account you can create an account. You will then need to select 'PAYE for employers' and enter your school's PAYE information (see below). You will be sent an activation code in the post by HMRC
In order to activate the 'PAYE for employers' service, you will need the following information:
- HMRC office number: this is on the letter HMRC sends out when you register as an employer. Enter the first 3 numbers, for example: 123/A246, enter 123.
- Employers PAYE reference: enter the second part of your reference (any letters and numbers after the slash) e.g. A246
- Accounts office reference: this is on the letter HMRC sends out when you register as an employer and in your payment booklet, e.g. 123PX12345678
If you do not have any of the above information, please contact firstname.lastname@example.org
Once you have received an activation code from HMRC and activated the 'PAYE for employers' function on your account, please contact email@example.com who can support you to connect your school's PAYE scheme to the Council's digital apprenticeship account and access your apprenticeship funding.
Please note that community schools should not set up their own digital apprenticeship account (a separate service from the government gateway/PAYE for employers function).
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).
- You can find out your current levy allowance by emailing firstname.lastname@example.org
- 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 email@example.com.
- 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:
- Preferably 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 £8.50/hour (National Living Wage)
If you would like to hire a new apprentice, or offer an apprenticeship qualification to an existing member of staff, please contact firstname.lastname@example.org or alternatively, contact the Hackney Education OD HR business partner (email@example.com), 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 Hackney Education 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 Hackney Education 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
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 Hackney Education OD HR business partner (email@example.com), 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|
|Early Years Educator||3||£6000||12-18 months|
|Early Years Lead Practitioner (in development)||6||TBC||TBC|
|School Business Professional||4||£6000||18 months|
|Facilities Services Operative||2||£3000||12 months|
|Facilities Management Supervisor||3||£4000||18 months|
|Facilities Manager||4||£6000||24 months|
|Chartered Manager (Degree)||6||£22000||48 months|
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: