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Apprenticeship Levy

The way Government funds Apprenticeship Training has changed.

From April 2017 any employer with an annual payroll of over £3m will pay into the Apprenticeship Levy to fund their Apprenticeship Training.  The funds available through the Apprenticeship Levy can only be spent on Apprenticeship Training, it does not cover the salary costs of employing Apprentices.

Those with a payroll less than £3m annually will be required to pay 10% of the costs towards Apprenticeship Training.

The Apprenticeship Levy is a tax against all businesses, however given there is a £15k tax allowance, it means only those employers with a payroll over £3m annually will pay into the Levy.  The Levy is calculated at 0.5% of your total salary bill (including wages, bonuses and pension contributions) less the £15k allowance The payments started in April 2017 through the monthly HMRC returns. 

The Government will top up each monthly Levy payment by 10%, to increase the amount of funds available to spend on Apprenticeship Training.

The funds are transferred to your chosen Apprenticeship Training Provider through your Apprenticeship Digital Account, which will also allow you to manage the budget by entering the best price negotiated with the Training Provider and stopping/suspending payments where staff leave or the training received is inadequate. 

Apprenticeship Training is changing, the current Apprenticeship Frameworks are being replaced by Apprenticeship Standards that have been developed by employers to be sector specific.  The new Apprenticeship Standards have an independent end assessment, which will be graded as fail/pass/merit/distinction

Deere Apprenticeships can advise all businesses how to train their staff before and after these changes are implemented.


  • How do I pay my Apprenticeship Levy- for those businesses with an annual payroll of over £3m, the amount payable is 0.5% of each monthly payroll less the £1250 monthly allowance, first payment scheduled for May 2017.  The Levy paid to HMRC is then transferred into your new Digital Apprenticeship Account (available from January 2017) to spend on Apprenticeship Training
  • How does the Apprenticeship Levy work across the UK- The amount available to spend on Apprenticeship Training through the Levy will depend on the percentage of your workforce that lives in England (determined by HMRC), it has not yet been announced how the system will work in Scotland, Wales & Northern Ireland as Skills (including Apprenticeships) is a devolved budget
  • What can the Apprenticeship Levy fund- The Apprenticeship Training can be used for newly recruited staff or existing employees, with training delivered by organisations approved onto the Register of Apprenticeship Training Providers (such as Deere Apprenticeships)
  • Does each Apprenticeship cost the same– there are 15 funding bands ranging from £1,500 to £27,000 we can advise you on the costs for the programmes suitable to your business
  • Are there any financial incentives- There is a £1,000 incentive payable to employers who train 16-18 year old Apprentices, or those aged 19-24 on an Education & Health Care plan, this is payable in 2 equal instalments at months 3 and 12
  • What happens to my existing Apprentices – they will be funded to complete their Apprenticeship on the current system, they can progress to a new programme funded by the Apprenticeship Levy post May 2017
  • What if I don’t have enough funds in my Digital Account to pay for the training- When buying Apprenticeship Training you don't have to have enough funds in your Digital Apprenticeship Account to cover the full cost of the training, the monthly payment system spreads the cost over the lifetime of the Apprenticeship (Training Providers are paid 80% of the funds in equal instalments across the duration of the programme, and 20% when the Apprentice sits their End Point Assessment).  If within any month the payments to Training Providers exceed the funds in your DAS account, you will need to pay 10% of the overspend (the Government pays the remaining 90%).
  • What if we’re not ready to start Apprenticeship Training in May 2017- The funds will be available to spend on Apprenticeship Training for 2 years, after this point the funds expire.  The Apprenticeship Digital Account will use funds on a first-in/first-out basis 

How we support you with the Apprenticeship Levy

Deere Apprenticeships can help you prepare for the Apprenticeship Levy by:
  • offering advice, support and guidance on the Apprenticeship Levy and the benefits to your business
  • calculating the amount you will be paying to HMRC annually, and the amount of funds you will be able to spend on Apprenticeship Training
  • creating an implementation plan looking at current Apprenticeship programmes, recruitment needs and current/identified training needs across all job roles against your Apprenticeship Levy budget, this should be viewed as part of a wider Workforce Development Plan
  • developing proposals on the Apprenticeship Training that Deere Apprenticeships can deliver to benefit your business in line with the implementation plan 
  • acting as your lead provider managing all Aprpenticeship delivery, even when we identify another training provider is better positioned to deliver a training need
To arrange a consultation visit please call John Sims (Managing Director) on 07729 617916 or e-mail

Working Example

Deere Apprenticeships is working with a large National Logistics business, to understand the impact of the Apprenticeship Levy and develop a plan to spend the funds available on Apprenticeship Training.  Firstly we established what financial impact the Levy would have on the business, and the funds available for Apprenticeship Training:

  • The business currently has an annual payroll of £89m, it anticipates a 9% increase for the Apr 2017 - Mar 2018 period.  Therefore the Levy bill the business faces is ((£89m+9%)*0.05%)-£15k=£470.050
  • 93% of the workforce live in England, therefore £470,050*93%=£437,146 is available for training.  The Government then increases this by 10%, so £437,146+10%=£480,861 is the final Apprenticeship Training budget for its English Workforce
  • The business does have seasonal variances (especially temporary workers during the business Christmas period), so the Levy budget will not build equally over the year

In terms of planning the Apprenticeship Training to be utilised through the Levy budget we have considered:

  • Current Apprenticeship Training - the business has had Apprenticeship Training in its main warehouse, which it wants to continue, anticipated to be 50 Warehousing Apprentices trained in year 2 of the Levy (as the current programmes run into year 1)
  • Current Staff Training - alongside some mandatory training the business does spend approximately £50k on Supervisory Training which could be delivered through Apprenticeship Training.  It has decided this will be its focus from May 2017, with 110 identified staff to undertake the Team Leader/Supervisor Apprenticeship Standards
  • Future Apprenticeship Recruitment - the business will now make it policy that all Administration role recruitment in the future will be as Apprentices, estimated to be 20 Administration Apprentices annually

In terms of planning the initial programme of 110 Team Leader/Supervisor Apprenticeship Standards, the way the funding will work is illustrated in the spreadsheet below.  It shows:

·         On average £40,071 will be available to spend on Apprenticeship Training each month

·         Whilst on programme the 110 Team Leader/Supervisor Apprenticeship Standards cost a total of £36,666 per month (80% of the total cost of training is paid in equal instalments across the planned length of the programme)

·         At month 12 the cost of this training is £146,674 (as 20% of the cost is payable when the Apprentices take their End Point Assessment), though a balance of £37,455 was accumulated from underspend this cost is in excess of the total funds available.  Therefore the employer would pay 10% of this additional cost (£6,914) and the Government would pay 90% (£62,234).  The spreadsheet then illustrates how the Apprenticeship Levy budget would build again in subsequent months if no training is planned.

·         In real terms Deere Apprenticeships would work with the employer to spread the End Point Assessments for 110 staff over 2 or 3 months to not go over the budget, but this scenario does illustrate why the plan needs to be carefully considered and what happens if an overspend occurs.

If your business could benefit from the development of a similar plan, please contact John Sims (Managing Director) on 07729 617916 or e-mail

Case Studies
What we Offer
What We Offer
   Training to develop your workforce

Deere Apprenticeships will work with you to identify training packages, usually through Government funded Apprenticeship schemes, that will improve overall business performance

   Support you with the Apprenticeship Levy

The new Apprenticeship Levy will fundamentally change how larger business fund their Apprenticeship training, we will work with you to plan your training to maximise the amount of funding you can claim against the Levy your organisation might pay

   Recruit your new Apprentice

We will create a job description to reflect the role, identify the appropriate Apprenticeship framework, advertise the vacancy and assist with the screening/selection process

   Assist with filling job vacancies

Deere Apprenticeships have strong links with Job Centre Plus and Community Groups to deliver employability skills to unemployed adults, many of these learners will be ideal to fill your current job vacancies