The Chancellor of the Exchequer has pledged from April 2019 employers will be able to transfer 25% of their levy funds to other companies, an increase on the previous 10% cap.
What is the Apprenticeship Levy and what can it be used for?
Historically, employers have only been able to transfer 10% of their training fund to other non-levy paying organisations, however, after feedback reporting that the Levy was not flexible enough, the government have announced some reforms.
Chancellor Philip Hammond announced the intention to increase the percentage at the Conservative party conference in Birmingham this week, along with the news that an extra £5 million will be granted to help the Institute of Apprenticeships offer more training options.
Hammond said: “We have heard the concerns about how the apprenticeship levy is working… so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent…
There will also be greater investment in apprenticeships in science, technology, engineering and mathematics (STEM) subjects.”
The transferring of funds means employers can share their levy with businesses outside their organisation, including smaller companies within their supply chain or apprenticeship training agencies.
Whilst previously you could only transfer to one other employer this has since changed and you can now transfer to an unlimited number.
Rules surrounding transfers:
- Sending and receiving employers need to be registered on the apprenticeship service.
- Employers will need to agree the apprenticeships that are being funded by a transfer.
- Organisations receiving transferred funds can only use them to pay for training and assessment for apprenticeship standards (not apprenticeship frameworks).
The levy applies only to those companies who spend more than £3m a year on their pay bill. With large companies now allowed to transfer a substantial amount of their Levy fund, hopefully more organisations will see it as a worthwhile opportunity to support their supply chain with taking on apprentices.
There are lots of smaller companies that supply large businesses which should see benefit from this, by enabling them to access high-quality apprenticeships with financial support and consequently close the growing skills gap.
Non-Levy paying employers
For non-Levy paying employers who are wanting to receive transferred funds, they will need to register and create an account and obtain a signed agreement from the ESFA.
Employers who pay the apprenticeship Levy and have unused apprenticeship funds can find employers who want to receive a transfer through the channels below:
- Employers in their supply chain
- Employers in their industry
- Apprenticeship Training Agency (ATA)
- Regional partners
How to start a transfer
The employer wanting to send their Levy funds over firstly need to agree on the details with the receiving employer. For example: which type of apprenticeship standard, the number of apprentices and the cost.
After both employers have registered on the apprenticeship service, they must complete the following in order to complete the transfer:
- Link with each other
- Select their training provider and apprenticeship details
- Receiving employer will add the apprentice details
- Sending employer will confirm the transfer
The payments will then be automatically transferred from the sending employer to the receiving employer, and then on to the training provider.
Over to you
Using your Levy funds to transfer to your supply chain is a great way to help upskill your workforce.
And if you’re looking for further information about the Apprenticeship Levy, be sure to download our free, comprehensive ebook guide: