The Apprenticeship Levy: What you need to know

Annette Allmark demystifies the incoming Apprenticeship Levy, so businesses of all sizes can understand their options. 

If you work in a business with a pay bill over £3m, you’ll know that the new apprenticeship levy is due to start in April, now just a couple of weeks away. From the next financial year, these businesses will have to pay an annual levy of 0.5% of their pay bill which can only be recouped when they employ and train apprentices.

So are you ready for the levy? Is your apprenticeship strategy in place? Are you confident that you have an apprenticeship programme that develops your talent and increases productivity and retention?

If you’re not – or you’re not sure – don’t worry. You’re not alone. Some organisations are more ‘apprenticeship-ready’ than others. Although the levy kicks in in April, there are many organisations that won’t be delivering apprenticeships from day one. Levy funds will only expire 24 months after they first enter your apprenticeship service account, so you still have time to put your plans in place.

The single most important element to start with is a coherent apprenticeship strategy. This shouldn’t exist in isolation – it needs to be part of your broader talent strategy. So think about how apprenticeships can be used to develop your talent, how they can help increase productivity and retention and how this fits into the bigger picture.

You have flexibility in the training your apprentices undertake as long as it meets the standard – so you can decide the combination of training that best suits your business needs.  

Engage with your leadership team to ask them about their aspirations around training and development and immerse yourself into the business to see what is required.

The levy itself obviously has financial implications for HR and L&D professionals but you will also need to work with their colleagues in finance to determine how you’re going to define and deliver a return on investment from the levy. Work with your finance department from the beginning to undertake cost modelling so that you can understand the numbers, funding bands and what both the opportunities and the costs are.

All parties will need to understand how much they need to invest in apprenticeships as well as ensuring they create fulfilling programmes that meet the new standards. Make sure all relevant stakeholders are involved in this, that you have the buy-in of the business more widely and that you communicate the goals of the new apprenticeships.

It’s also important to ask yourself how HR and L&D systems might be impacted and how you’re going to report into the Skills Funding Agency.   

The new-style apprenticeships have been developed by employers and state exactly what an apprentice should be able to do once they complete their programme. To see which of them can be used to develop the skills you need, look across your business and explore the new standards, covering entry level through to managerial roles.

Once you know which of the standards you want to use in your business, you’ll need to look at what training and development you already do and analyse how this maps to the apprenticeship standard. Carrying out a gap analysis is vital. It’s important to understand what programmes you already have in place and what parts of the standards these meet.

Only when you have done that can you identify the gaps in your provision and decide how you are going to fill these.

As the training is not prescribed in the new apprenticeships, you can choose in-house or external programmes. You have flexibility in the training your apprentices undertake as long as it meets the standard – so you can decide the combination of training that best suits your business needs.  

If you plan to use an external training provider, you’ll need to identify the one that best meets your needs. You should check your chosen provider is on the register of apprenticeship training providers to be confident that they have the capability to deliver good quality apprenticeships.

Or, if you choose to deliver the training in-house, you’ll need to register your own business as a provider on the register of apprenticeship training providers. A guide is available from to walk you through the process.

As an employer, you’ll be responsible for deciding when your apprentice is ready for the assessment, and you’ll need to be confident that they have covered the full standard. Their progress should be regularly reviewed and recorded throughout the programme.

To find organisations that are approved to assess the standards in your industry, you’ll be able to search the register of apprenticeship assessment organisations via the apprenticeship service which is now open for registration to levy-paying employers.

Apprenticeships are a fantastic route to develop the critical skills required now and in the long-term. Embedding the new standards into your talent strategy will enable you to maximise your apprenticeship levy investment as well as providing a valuable progression route for both new and existing employees. It can be a steep learning curve but there is plenty of support available and networking and collaboration is critical. 


About the author

Annette Allmark is director of strategic policy at People 1st.


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