Introduced on 6 April 2017, the apprenticeship levy is a government initiative designed to address the UK’s skills gap and create more apprenticeship opportunities. If your annual payroll exceeds £3 million, a small percentage goes toward your levy fund, which helps cover apprenticeship training and assessment costs.
Employers have 24 months to make the most of their levy funds. To ensure the funds don’t go to waste, companies also have the option to transfer their unused funds to another eligible business, this is called an apprenticeship levy transfer.
And the best news – you don’t have to be a levy-paying business to be eligible to apply for unused levy funds to help grow and develop your team.
What are the benefits of an apprenticeship levy transfer?
Taking advantage of the apprenticeship levy transfer scheme to ensure your levy fund is fully utilised offers plenty of benefits for your business:
- Support other organisations: Help businesses, charities, or sectors aligned with your company values.
- Invest in your industry or community: Use your funds to upskill workers in your sector or boost training in your local area.
- Champion important causes: Align your levy transfer with your Corporate Social Responsibility (CSR) goals by supporting minority groups, charities close to your heart, or organisations like the NHS.
- Strengthen your talent pipeline: Fill skill gaps in your industry by creating opportunities for new and existing employees.
- Boost your reputation: Levy transfers position your business as a proactive supporter of workforce development, a great way to earn some positive PR.
Ultimately, by transferring apprenticeship levy funds, you are helping to create valuable opportunities for the future workforce and contributing to the upskilling of current employees – a no-brainer!
What is the apprenticeship levy transfer allowance?
The apprenticeship levy transfer rules state that employers can now transfer up to 50% of their previous year’s levy funds – up from 25% as of 22 April 2024.
This is calculated based on:
- The total levy declared in the previous tax year.
- The percentage of your employees who live in England.
- Plus the 10% top-up payment from the government.
Remember, you cannot exceed this 50% allowance in a financial year.
What type of business can I transfer my apprenticeship levy to?
The apprenticeship system has been designed by the government to benefit all companies regardless of their size or whether they pay the levy or not.
You can transfer your apprenticeship levy funds to any business with an apprenticeship service account.
Levy funds can also be transferred to a charity associated with your business.
Are there any rules around the apprenticeship levy transfer?
A few things to keep in mind:
The company receiving funds must have an apprenticeship service account to be eligible to receive an apprenticeship levy transfer.
Funds can only be used for a new apprentice, this can either mean a new team recruit or an employee looking to upskill through the initiative, but not an employee who has already started their apprenticeship journey.
The transferred funds can only be used for training or the endpoint assessment for a new apprentice within the apprenticeship standard funding bands.
A transfer of levy funds is not a one-off payment but a commitment to pay for an apprentice to complete their specific apprenticeship course. An apprenticeship course runs for a minimum of 12 months, starting at any point in the year, so it is important to be aware you may be transferring funds over more than one financial period.
Whilst there is no limit to the number of transfers you can make, the apprenticeship levy transfer rules state that you must stay within your levy transfer allowance.
How do I transfer apprenticeship levy funds?
There are two ways to make a levy transfer:
- Create a public pledge: Use your apprenticeship service account so other businesses can apply to you for funding.
- Connect directly with a business: Work with a company you already know – for this you will need their apprenticeship service account ID.
For each pledge, you will need to clarify the total amount of money available for that financial year.
As mentioned above, if you wish to align your funds with your company values, you can use these four optional criteria:
- Location: Support businesses in your local area or areas you would like to see benefit from economic growth.
- Sector: Help strengthen a particular industry that aligns with your company’s CSR goals.
- Job role: Improve talent pipelines within your own industry sector.
- Qualification level: Choose to fund training to upskill current employees or prepare apprentices for leadership roles.
Each pledge is shown on a public website so that any business can apply to you for levy transfer funding.
Apprenticeship levy transfers for small businesses
If you’re a small or medium-sized business (SME) or have a limited apprenticeship levy pot, an apprenticeship transfer of levy funds is a fantastic option to help you cover the cost of training and assessment for your apprentices.
Here’s how it works:
- With co-investment, SMEs or smaller levy payers only cover 5% of apprenticeship training costs, and the government takes care of the rest.
- For non-levy-paying businesses, the government will contribute to up to 10 apprenticeships – and for additional apprentices, funding can come through a levy transfer from a levy-paying employer.
For small businesses, it makes it easier than ever to utilise the UK apprenticeship initiative as a key talent-building resource.
Where can I apply for an apprenticeship levy transfer?
Here’s how to get started on your journey with an apprenticeship transfer of levy funds:
- Identify your training needs: Choose an apprenticeship programme that matches your business goals.
- Select a skill level: Apprenticeships can support both new hires and current employees looking to develop their skills. Level 2 and 3 programmes are ideal for entry-level professionals, whereas Level 4 and above can be better suited to those who hold more experience or existing members of staff.
- Find the right training provider: Choose a trusted partner like Access Industry to guide you.
You can search for funding opportunities here.
And don’t forget, as already highlighted, you will need to have an apprenticeship service account to be considered for funding.
Need help with apprenticeships for your business?
At Access Industry, we specialise in helping businesses get the most out of the apprenticeship levy transfer scheme. Whether you’re a levy-paying business looking to maximise your apprentice levy resource or an SME ready to grow your talent force, our experienced team can guide you every step of the way.
Get in touch for apprenticeship and levy transfer support.
