The Apprenticeship Levy - An Update

Written on: 19 August 2016

Written by: Amanda McCombie



Here at Baltic, we aim to keep you up to date with all things apprenticeships, and recently, an apprenticeship levy update was announced.

What is the apprenticeship levy?

The apprenticeship levy is the tax which will be set at 0.5% of an employer’s annual salary bill if this sum is over £3m per year, the other 98% of employers will be required to make financial contributions to all apprenticeship training.

Key changes to the apprenticeship levy and funding from April 2017.

  • When the apprenticeship levy comes into place from April 2017, apprenticeships will be available for those with a degree or similar higher qualification, as long as the training and qualification to be undertaken is not the same as that which was previously attained.
  • The new apprenticeship funding system will have 15 funding bands, with the upper limit of these bands ranging from £1,500 to £27,000. All existing and new apprenticeship frameworks and standards will be placed within one of these bands. The upper limit of each funding band will cap the maximum amount of digital funds an employer who pays the apprenticeship levy can use towards an individual apprenticeship.
  • The upper limit of the funding bands will cap the maximum amount that government will contribute when an employer does not pay the apprenticeship levy or has insufficient digital funds and is eligible for extra support. It will be up to employers to negotiate prices with providers within these funding limits.
  • Following the apprenticeship levy update, small employers with fewer than 50 employees will not have to pay the employer contribution (outlined below) if they recruit apprentices aged between 16-18. This is to further encourage the engagement these businesses have with the current apprenticeship frameworks and help make the transition to the new process as simple as possible.
  • Extra support will be available to employers and training providers that take on 16- to 18-year-old apprentices or young care leavers – this will be worth £2000 per trainee.

The latest apprenticeship levy news (12/08/2016)

It was confirmed last week that when the apprenticeship levy is introduced, the government will pay 90% of the costs for those employers with annual wage bills below £3m, meaning most employers will only have to contribute 10% to the cost of an apprenticeship.

This is great news for the 98% of employers who don’t fit the criteria. Throughout the pilot, the employer contribution stood at 33% which was feared to be too high and could have possibly acted as a deterrent for smaller businesses in engaging with the reformed apprenticeship programme, as the outgoing costs could be deemed to be too high.

For more apprenticeship levy news, keep an eye on our blog and visit our What is the Apprenticeship Levy? page. Here you’ll find the apprenticeship levy explained, plus our contribution calculator to find out where you stand when it comes to levy contributions.


At Baltic Training we’re committed to quality, customer excellence and making a real difference to society. We are a trusted and positive organisation partnering employers to create apprenticeship opportunities within the digital sector and are dedicated to driving a positive change in the way that businesses recruit and train their employees.

If you’re looking to grow your business, please see our guide to recruiting an apprentice with Baltic Training, fill in our enquiry form or call us on 01325 731 050.

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