Not using your full levy fund? Transfer up to 10% of it and see the benefits for a supporting business
Employers who pay the Apprenticeship levy can transfer a maximum amount of 10% of their annual levy fund to other employers to spend on Apprenticeships. Transferred funds will be used to pay for the training and assessment cost of the Apprenticeships agreed with the receiving employer. We want to explain how this process works and what the benefits will be to your organisation.
According to an Open University study published in May 2018, just 8 per cent of Apprenticeship levy funds were actually spent in the 10 months since the scheme's launch, with £1.28bn of £1.39bn paid in by businesses "sitting unused" in accounts. It's up to your organisation whether or not you want to spend those funds to develop the skills and knowledge of your current employees and/or recruit Apprentices, or not. If you choose not to spend this fund on Apprenticeships, there is no way of getting that money back or putting it to use for other business purposes so perhaps consider a transfer in order that a non-levy paying organisation can benefit.
Who can you transfer your levy funds to?
Work with employers in your supply chain
Providing an employer in your supply chain with the funds to enable Apprenticeships in their organisation will help them to develop their processes, which in turn, will mean a faster and smoother delivery process for your company.
Get in touch with employers in your industry
There may be organisations working within your industry that are not in direct competition that could benefit from Apprenticeships. You could see if you can work in partnership with them providing them with your unused levy contribution to your mutual benefit.
Get in touch with an Apprenticeship Training Agency (ATA)
The ATA works with employers that are not in a position to fund the costs of an Apprentice. They offer support in terms of funding the cost of the Apprentice wages and any training costs. For more information on the services they offer.
How much can be transferred from your Apprenticeship levy fund
A levy paying employer can transfer up to the maximum of 10% of their full fund total to as many employers as they choose.
The Apprenticeship service calculates this amount by:
- The total amount of levy declared in the previous tax year
- With the English Percentage - The amount of funds in each employer’s account will depend on how many of their employees live in England and the proportion of their paybill paid to these employees. This is called the ‘English percentage’.
- Plus the payment of 10% from the government
What levy fund transfers can pay for
Transferred funds will be used to pay for the training and assessment cost of the Apprenticeships agreed with the receiving employer.
Sending and receiving employers need to know that:
- Funds are paid monthly for the duration of the Apprenticeship
- Only levy-paying employers can make a transfer
- Any employer can receive and use transferred funds
- Sending and receiving employers have to be registered on the Apprenticeship service
- A transfer can only be used to pay for training and assessment for Apprenticeship standards
- Transfers can only be used for new starts
How to start a levy fund transfer
The employer sending and the employer receiving the funds will first have to lay out an agreement, to cover details such as the Apprenticeship standard(s) involved, number of Apprentices and the cost of the Apprenticeships.
Once both employers are registered with the Apprenticeship service, the following actions must be taken in their accounts to complete a transfer
- Connect with each other
- Receiving employer to add the apprentice details
- Confirm the transfer
Employers who are transferring funds
Before you make a transfer from your apprenticeship account, make sure that you:
- Have enough funds to transfer to another employer
- Have a clear understanding of the forecasted cost to you, which will cover the duration of the apprenticeship you’ve agreed to fund through a transfer
- Understand you will be funding the total cost of their apprenticeship and not just the 10% co-investment
- Agree with the employer who is receiving the transfer, details of the apprenticeships you’re funding
- Are aware of the funding rules around transferring apprenticeship funds
There are a few points that employers need to be aware of before agreeing to any transfers, such as you can’t transfer funds to another employer if you are currently receiving a transfer, or if you are currently transferring funds to another employer, you can’t receive transferred funds to pay for your Apprenticeships.
Payments will leave your Apprenticeship service account on the first of each month, and if the Apprenticeship stops, your transferred payments will stop as well.
Employers who want to receive a levy fund transfer
If you want to receive a transfer from another employer you must be aware of the following:
- You can only use the transferred funds for apprenticeship training and assessment
- Transferred funds can only be used for apprenticeship standards
- You’ll need to create an account on the apprenticeship service to receive the transfer and pay for apprenticeship training
- You’ll need to sign an agreement with the Education and Skills Funding Agency (ESFA)
- Transfer payments will be made monthly from the sending employer to your apprenticeship account
- If the apprenticeship stops then the funding will stop too
- You won’t have to pay any funds back to the sending employer
- If the employer sending you funds runs out of funds, you must make a 10% contribution to the cost of apprenticeship training and the government will pay the remaining 90% (this is called co-investment)
- A transfer can fund up to the funding band maximum of a standard, if the cost of training is more, you’ll have to pay the difference to the training provider
- If a training provider transfers funds to you, they cannot deliver the training for that funded apprenticeship
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