References to the ‘skills gap’ in relation to UK business are commonplace. Unfortunately, potential solutions to the skills crisis almost always require some degree of funding, which is in short supply during difficult trading conditions.
The Apprenticeship Levy Share Scheme offers a viable means through which SMEs, who may not be able to sustain the cost of apprenticeship training themselves, can avail themselves of funding made available from the unspent tax revenues of larger organisations.
We look at the scheme in detail.
What is the Apprenticeship Levy?
The Apprenticeship Levy is a business tax applied to any UK employer whose payroll is greater than £3 million per annum.
This tax, a deduction representing 0.5% of the total pay bill, is ring-fenced to fund apprenticeship training, and a 10% top-up is added by government.
The total fund is stored in a corporate digital account for up to two years, after which any unspent amounts are deemed to have expired and are returned to the Treasury.
What is the Apprenticeship Levy Share Scheme?
The Apprenticeship Levy Share Scheme is a means by which large employers who pay the Apprenticeship Levy are able to transfer a portion of any unused levy funds in their corporate digital accounts to other, usually smaller, companies.
This donation enables those businesses to fund their own apprenticeship training programme, which they may not have been able to afford otherwise.
How is the Apprenticeship Levy allocated?
Initially, levy-paying employers could transfer 10% of their funds into the scheme, but ongoing reforms have increased flexibility. Employers can now allocate up to 50% of their levy funds to other organisations, which in practice are usually SMEs in their local network or specialist providers in their supply chain.
The gift can also be allocated non-specifically (i.e. any qualifying business can apply) but with stipulations in factors such as geography, market sector, apprenticeship type or job role in order to direct the funding appropriately.
In summary, levy-payers can choose one of two ways to release the unspent funds:
- Making a public offer, listing the funds they are making available and any associated conditions via the Apprenticeship Service, and allowing SMEs to apply for the assistance.
- Directly transferring to a known recipient company using an Apprenticeship Service account ID.
How can organisations use funding received from the levy share?
Levy transfers can fund up to 100% of apprenticeship training and assessment costs for new apprenticeship starts. The company transferring its funds must financially support the apprenticeship for its full duration, though direct responsibility for employment and training quality lies with the recipient employer.
Large corporates who have made their unspent levy share widely available to other companies include the Co-op, Virgin Media, O2, Royal Mail and Aldi. Each has committed at least £1 million or more to support SMEs, charities, and social enterprises by transferring unused levy funds to them.
Closer to home, one of the larger organisations in the Midlands who make their levy share available is of course, Birmingham City University.
What kind of organisations qualify for BCU levy share funding?
The four most common recipient groups are:
- Small-to-medium size enterprises (SMEs)
- Voluntary, community or social enterprises (VCSEs)
- Employers wishing to hire BCU alumni as apprentices
- Organisations with new or existing staff ready to begin apprenticeship programmes
What can I expect from BCU?
- Potential funding to cover up to 100% of Apprenticeship training and assessment costs.
- A dedicated account manager, who will work with you through the entire process.
- Levy transfers automatically approved in many cases.
- You won’t have to pay the usual 5% co-investment fee.
- You may not even have to pay employer national insurance contributions (for apprentices under 25 earning below the higher tax rate threshold.)
- Become part of BCU's wider organisation and its huge professional network, strengthening your own presence in the market and potentially creating brand new revenue streams
An Apprenticeship Service account is all you need to get started. It’s very straightforward to set up, just visit the GOV.UK website.
What does the future hold?
With the Apprenticeship Levy shortly being expanded to become the Growth & Skills Levy, there are still more changes and more opportunities coming down the track.
There are still details to be finalised, but fundamentally the new-look share scheme will allow levy funds to be used more flexibly, for example on upskilling existing staff in bite-size instalments by enrolling them on sector-specific Short Courses, rather on traditional apprenticeships, with their long-term commitments.
To find out more about BCU Degree Apprenticeships and the Levy Share Scheme, simply visit the dedicated webpage.
