Employed for 30 hours a week
Apprentices must be employed for a minimum of 30 hours per week,
including time training away from the workplace. If an apprentice’s
personal circumstances or if the nature of employment in a given sector
make it impossible to work these hours, then an absolute minimum of
16 hours a week must be worked.
A minimum length of 12 months
The minimum apprenticeship length is 12 months, and may be longer
for certain apprenticeship schemes. The length may be reduced for
some apprentices aged over 19 if they have relevant prior learning or
If the apprentice works part time then the total duration of the
apprenticeship is extended accordingly
280 hours guided learning
Guided learning relates to training which is designed to achieve clear
and specific outcomes which contribute directly to the successful
achievement of the apprenticeship. Apprentices must spend at least 280
hours in ‘guided learning’ in their first year. 100 hours or 30%
(whichever is greater) of all guided learning must be delivered off-thejob.
Clear and verifiable evidence must be provided of all learning
Training to level 2 in Maths and English
Apprenticeships must offer training to Level 2 in English and Maths or
Functional Skills, if the apprentice does not already have these or
Apprentices must sign an Apprenticeship Agreement with their
employer before the apprenticeship begins. This is a contract stipulating
the framework being followed and the skill, trade or occupation the
apprentices is working in. Without this agreement an apprenticeship
completion certificate cannot be issued.
Specification of Apprenticeship Standards for England (SASE)
SASE sets out minimum academic requirements for frameworks, written
primarily for organisations designing frameworks. It stipulates minimum
qualification levels required of apprentices under the vocational,
technical and key skills elements of the apprenticeship, as well as other
areas such as team work and creative thinking.
Further detailed information on the minimum contractual and
operational standards required of apprenticeships can be found in the
SFA Funding rules for 2015 to 2016
The Apprenticeship Levy
2.1 What is the apprenticeship levy?
On 6 April 2017 the apprenticeship levy came into effect with all UK
employers with a pay bill of over £3 million per year paying the levy. The
levy is set at 0.5% of the value of the employer’s pay bill, minus an
apprenticeship levy allowance of £15,000 per financial year. The levy is
paid into an apprenticeship service account, and funds in this account
have to be spent on apprenticeship training and assessment.
The Government has stated that the levy “will allow us to double
investment in apprenticeships by 2020 from 2010 levels, to £2.5bn
Who will pay it?
Employers will pay the levy if they either:
• have an annual pay bill of more than £3 million; or
• are connected to other companies or charities which in total have
an annual pay bill of over £3 million.
An employer’s annual pay bill is calculated as payments to all employees
that are subject to employer Class 1 secondary National Insurance
Employers will report and pay their levy to HMRC each month through
the PAYE process, at the same time as they pay any income tax and
National Insurance contributions that are due.
It is up to the employer to work out how much they need to pay and to
inform HMRC of this amount. The HMRC Pay Apprenticeship Levy
guidance note states that employers will need to do so if:
• their pay bill in the previous tax year was greater than £3 million
• they think their pay bill in the current tax year will be greater than
• if their annual pay bill unexpectedly increases to more than £3
How much will an employer pay?
The apprenticeship levy is charged at 0.5% of the value of the
employers’ pay bill, minus an apprenticeship levy allowance of £15,000
per financial year. Connected companies or charities will pay an amount
based on their combined payroll, but will only have one annual
allowance of £15,000 for all the connected companies or charities
within their group.
The allowance means that only those employers (or connected
companies/charities) with an annual pay bill of over £3 million will
actually have to pay and report the levy. This is because 0.5% of an employer’s £3 million pay bill is £15,000, which is equal to the levy
The monthly amount the employer will need to pay will be dependent
on each month’s pay bill. If they had a higher pay bill in one month,
then they would pay a higher amount of levy in this month.
For example, an employer with a pay bill of £500,000 in one month
would pay £1,250. This is calculated by taking 0.5% of 500,000 (which
is £2,500) and then removing the monthly levy allowance of £1,250
(which is the annual levy allowance of £15,000 divided by 12). If in a
subsequent month their pay bill was £250,000 then they wouldn’t pay
any levy in this month (as 0.5% of 250,000 is equal to the monthly levy
allowance of £1,250).
Individuals or companies who only employ people for part of the
financial year will still receive the full £15,000 allowance, and will have a
higher levy allowance for the first month.
For example if a Company starts up in August and it believes its annual
pay bill for that tax year will be over £3 million, it must begin reporting
and paying the levy from that month. It is still entitled to the full annual
levy allowance of £15,000, pro-rated over the 12 months of the tax year
(so £1,250 per month), and in the first month it will receive the total of
the year-to-date pro-rated payments. Therefore, the company’s prorated
levy allowance for August will be £6,250 (£1,250 x 5).
Unused allowance can be carried forward over months in the same
financial year, but it cannot be carried forward into a new financial year
What happens to the money paid into the levy?
Levy-paying employers will need to register an apprenticeship service
account which is used to pay for apprenticeship training and
assessment. After the employer pays their levy to HMRC each month,
the government will then pay these funds into the employer’s
apprenticeship service account.
Once apprenticeship training has started, monthly payments will be
automatically taken from the employer’s service account and sent to the
training and assessment provider.
What can the money in the apprenticeship service
account be spent on?
The funds in the service account can only be spent on apprenticeship
training and assessment with a training provider. It cannot be used for
other apprenticeship costs, such as the wages of an apprentice.
Will the Government provide any additional topups
to the money in a service account?
The Government will apply a 10% top-up to the funds that are paid by
an employer for the levy, which will be added at the same time as the
levy payment enters the service account.
For example, if an employer makes a levy payment of £200 per month,
then the Government will top up this payment by £20
Do the funds in the service account expire?
The funds will expire 24 months after they enter the service account,
and an employer will receive a warning prior to any funds expiring.
Whenever a payment is taken from the service account, it will
automatically use funds that entered the account first to try to minimise
the amount of expired funds.
After the funds in a service account expire, the employer will no longer
be able to spend them on apprenticeship training and assessment.
2.2 Projections of who will pay the levy in
In August 2016 the Department for Education (DfE) published a
document entitled Information on apprenticeship levy which provided
data on the amount of apprenticeship levy they expect to be paid in
2017-18 and the proportion of employers who will pay it. These
experimental statistics were published in response to a number of
Freedom of Information (FOI) requests for the analysis supporting
apprenticeship levy policy.
The document states that the DfE expect around 19,000 employers to
pay the levy in 2017-18, which is 1.3% of all employers. This would
generate £2.7 billion in levy funds, meaning that the average levypaying
employer would pay around £140,000 into their levy account in
The document provides further breakdowns by industry sector and by
size of the employer. This shows that:
• The manufacturing sector is expected to provide the largest
number of employers who will pay the levy in 2017-18 (2,710
employers, 2.9% of all manufacturing employers). This is
expected to generate £180 million in levy funds.
• The public administration and defence sector is expected to
provide the largest proportion of employers who will pay the
levy (10.4%). They are expected to generate £115 million.
• The education sector is expected to generate the largest amount
of levy (£385 million). 2,590 (9.0%) of employers are expected
to pay the levy in this sector.
• Employers in ‘unknown’ sectors are expected to generate the
largest average levy per employer (£750,000 per employer), with
the Human health and social work activities sector, the Public
administration and defence sector and the Financial and
insurance activities sector all having averages per employer of
between £250,000 and £300,000.
• Small employers (those with between 0 and 49 employees) are
extremely unlikely to pay the levy – only 410 out of 1.44 million
employers are expected to do so.
Almost 20% of employers with 250+ employees are not
expected to pay the levy
• 97% of the levy will be paid by the 0.9% of employers that
have 250+ employers.
In its report Reforms to apprenticeship funding in England the Institute
of Fiscal Studies has calculated that 60% of employees work for an
employer who will pay the levy.
The expected yield for the apprenticeship levy is published in the Spring
Budget 2017 document. It is estimated to raise £2.6 billion in 2017-18,
and that this amount will increase by £0.1 billion each year up to £3.0
billion in 2021-22.
Apprentice levy in specific work sectors
The Government published guidance on paying the Apprenticeship levy
which included a section which stated whether the apprenticeship levy
applied in specific sectors.
The Department for Education published a Schools’ guide to
apprenticeship reforms in March 2017.
Only some schools will pay the levy, and whether they do will primarily
depend on whether the staff within the school are employed by the
local authority or employed by the school’s governing body.
The governing body employs the staff in voluntary-aided schools,
foundation schools, free schools and academies. Like other employers,
these schools will pay the levy if they have a pay bill of over £3 million
The local authority employs the staff in other maintained schools, and
therefore the local authority would be responsible for paying the levy
for schools under their control. Each local authority with a pay bill of
greater than £3 million will pay the levy.
For local authorities who will pay the bill, they will be able to decide
how they will pay it. They will most likely pass the cost of the levy onto
Multi-academy trusts will pay the levy if the pay bill for all the schools
within the trust is greater than £3 million, and they will get a single
annual allowance of £15,000.
The Department for Education has estimated that the levy will add
0.4% to the cost of schools.
Independent schools will only pay the levy if their annual pay bill is over
£3 million per year.
Construction and Engineering Construction
Employers within the construction industry are already required to pay
the Construction Industry Training Board levy, while those in the
engineering construction industry pay the Engineering Construction
Industry Training Board levy. The funds collected through these levies is
used to provide training to the whole industry.
These employers will also pay the apprenticeship levy.
Employers who supply labour
The Recruitment and Employment Confederation (REC), a body
representing UK recruitment businesses, has continually expressed
concern about how the levy impacts on recruitment agencies which
provide temporary agency workers to clients. Concerns also have been
raised by the trade bodies representing freelancers, contractors and
umbrella companies who fear that this will disproportionately impact on
the employers that they represent as they have artificially high payrolls.
Agencies that specialise in temporary workers usually retain the
temporary agency worker on their payroll. Therefore these companies
can have payrolls over the £3million threshold despite small number of
staff working directly for the company. The REC argues that this means
that small to medium sized recruiters, specialising in temporary agency
workers, will be unfairly captured by the levy. The REC also argues that
opportunities to take advantage of apprenticeships are limited for
recruitment agencies specialising in temporary employees. This is
because apprenticeships tend to last longer than agency workers are
The government stated in the Gov.uk guidance on the apprentice levy
that employers who supply labour to clients and pays National Insurance
contributions for those workers will be liable to pay the levy, providing
their annual pay bill exceeds £3 million. This was confirmed in David
Gauke’s answer to a parliamentary question:
- Where an employment agency supplies labour to a client and pays
Class 1 secondary National Insurance contributions for those
workers, they will be liable to pay the levy, providing their annual
pay bill exceeds £3million.
The government recognises the important contribution that
contingent labour makes to the economy, however, excluding
agency workers would create adverse incentives to hire all staff
The government will support all employers in using the levy funds
to invest in apprenticeships and the Department for Business
Innovation and Skills is working with employers to create
apprenticeships across all sectors.
Can employers reduce their employees’
wages to pay for the levy?
Section 109 of the Apprenticeship Levy Finance Act states that the
earnings of those working for an employer cannot be decreased to pay
for the levy. This applies to an employer who is liable to pay any
secondary Class 1 contributions under Part 1 of the Contributions and
Register of Apprentice Training Providers
From May 2017, employers paying the apprenticeship levy will be able
to choose a provider from a new register – the Register of
Apprenticeship Training Providers. The Government has stated that,
“the register will give employers an assurance that the providers they
are using have the capacity and capability to delivery good quality
From May 2017 onwards, to be eligible to deliver apprenticeship
training for apprenticeships, organisations must be listed on the register.
Organisations will be divided into 3 provider types:
• Main provider – organisations that can be selected by levy-paying
employers to deliver apprenticeship training.
• Employer provider – levy paying employers who are permitted to
provide training to their own staff or to apprentices in connected
• Supporting provider – organisations that only deliver as a
subcontractor for contract values between £100,000 and
£500,000 per year in total.
Organisations who want to deliver less than £100,000 of apprenticeship
funding per year as a subcontractor do not currently need to apply to be
on the register.