Organisations who pay into the Apprenticeship Levy have access to a ringfenced fund that they can use for apprenticeship training. Savvy employers use these funds to grow their team or upskill existing employees, but many will have funds left over.
These unused levy funds are at risk of expiring after two years. Instead, these funds could be used to help other businesses access apprenticeships.
To share opportunity and maximise the number of apprenticeships funded by the levy, employers can transfer a percentage of their unused Apprenticeship Levy funds to other organisations.
This blog will give you an overview of how the process works, who is eligible for levy transfers, and how Baltic Apprenticeships can help facilitate your levy transfer.
How much can I transfer from my Apprenticeship Levy funds?
Employers can transfer up to 25% of their annual Apprenticeship Levy funds.
This amount is calculated by taking the total amount of levy declared in the previous tax year, with the English percentage applied and a 10% government top up added. This allowance is calculated every tax year.
Who Can I transfer Apprenticeship Levy funds to?
If you pay into the Apprenticeship Levy, you can transfer unused funds to any other organisation you choose. You may wish to gift your levy funds to employers that you currently work with closely, or who share your values and goals.
The employer receiving a levy transfer should not currently be transferring their own funds to others. They will also need to take into account any state aid they have received in the last 3 years, as a percentage of the levy transfer will count towards their state aid limit.
What can apprenticeship levy funds be spent on?
Transferred levy funds can only be used to pay for the training and assessment costs for Apprenticeship Standards.
Levy transfers can only be used for new apprenticeship starts – that is, they can’t be used to fund someone already enrolled on an apprenticeship programme. The only exception to this is when the apprentice is changing employer and there is an agreement to continue the apprenticeship via a transfer of funds.
The Apprenticeship Levy can’t be used for the related costs of an apprenticeship, such as wages, travel expenses, or equipment. This is the responsibility of an apprentice’s employer – not the organisation donating their levy funds.
How do I Transfer Levy Funds?
All levy transfers are handled through your online Apprenticeship Service account. There are two different approaches to transferring apprenticeship levy funds: making a transfer connection and making a levy transfer pledge.
Make a Levy Transfer Connection
A levy transfer connection is where you transfer your Apprenticeship Levy funds directly to a specific organisation.
You can use this method to facilitate apprenticeship levy transfers that have been arranged informally through your business networks, brokered with the assistance of your local authority, or have been selected through an independent application process.
To transfer levy funds in this way, you will need the receiving organisation’s apprenticeship service account ID to set things in motion. The beneficiary then needs to accept the transfer connection and agree the training details through the digital Apprenticeship Service.
Make A Levy Transfer Pledge
Levy transfer pledges were introduced to the digital Apprenticeship Service in October 2021. This system lets organisations with excess levy funds create transfer opportunities for other businesses to apply for.
Levy transfer pledges are a useful way to find businesses in need of apprenticeship funding, review applications, and manage the transfer in one simple system.
With a levy transfer pledge, you can customise the amount you are willing to transfer, set location filters, and indicate which sectors, job roles, and levels of apprenticeship training you are interested in supporting.
Businesses looking for apprenticeship funding can then respond through the Apprenticeship Service, providing additional information to help you make your decision.
Things to Consider before making an apprenticeship levy transfer
A levy transfer should cover 100% of the training and assessment costs for an apprenticeship programme, so you’ll need to ensure you have sufficient funds in your account. It isn’t possible to split the costs of an apprenticeship between multiple employers.
With a levy transfer, the funding is deducted each month – just like it is with your own apprentices. This means that payments could be made over multiple financial years, and unforeseen events – such as a break in learning – could affect your apprenticeship budget in future months.
It’s important to account for your levy transfer commitments when planning future apprenticeship training. If you are transferring levy funds, you will not be eligible to receive a levy transfer during the same time period.
Get Help to Arrange a Levy Transfer
If you’re looking to transfer your levy funds but haven’t yet confirmed who you’d like to share them with, it’s always worth checking whether your local authority or apprenticeship training provider run a brokering service.
Many local councils run levy transfer schemes for businesses in their area, matchmaking employers who have levy funds to spare with organisations who need apprenticeship funding. This can take some of the legwork out of the transfer process – reviewing applications from other businesses on your behalf.
Training providers, such as Baltic Apprenticeships, can also help connect employers looking to share opportunity through a levy transfer.
Find out More:
If you’d like to know more about the Apprenticeship Levy, or to enquire about arranging a levy transfer, please get in touch with our friendly and knowledgeable team.