The Apprenticeship Levy – Explained

The Apprenticeship Levy – Explained

The Apprenticeship Levy - Explained


Apprenticeship Funding

Training for your Staff

Richmond Training apprenticeships combine practical experience with the Knowledge Skills and Behaviours you need in your business.

Richmond Training can offer several solutions in the training and development of your team, helping your staff learn and develop in their role by combining on- line training with practical workshops supporting your team to gain nationally recognised qualifications.

So, whether you want to develop an existing member of the team or a new employee Apprenticeships could be the answer.


Did you know Small to Medium Sized Businesses can access the Digital Apprenticeship Service, find a training provider and request apprenticeship training for your existing staff and any new apprentices you recruit, it is easy to register just follow the guidance provided below and click on the link to register.

Employers who do not pay the apprenticeship levy will be able to reserve funding for apprenticeship standards from January 2020. Initially you will be limited to three ‘active or used’ reservations at any given time

An ‘active’ reservation is where the reservation has not yet turned into a commitment and has not yet expired

A ‘used’ reservation is where the reservation has been turned into a commitment.

Reserving funds is an action that must be undertaken by you the employer prior to recruiting an apprentice or confirming a start date with an existing employee. The employer may give Richmond Training their permission to do this on their behalf through the apprenticeship service.

Each reservation is linked to an employer and their account.  If a provider reserves the funds on behalf of the employer, the employer can still use this reservation with any provider. The employer can change the provider at any time up to the point of turning the reservation into a commitment.

Once a reservation has been made, funds are guaranteed for that apprenticeship, subject to the reservation being turned into a commitment, and all other eligibility criteria being met as detailed in the Apprenticeship Funding Rules.  This will be the eligibility criteria that is in place at the time the apprentice starts on programme and not when the reservation is made.

How to make a reservation

Employers who do not pay the apprenticeship levy will be able to create accounts on the apprenticeship service from January 2020.

Once employers have set up their account and accepted the employer agreement, they can reserve funds.

When making a reservation the following details will be required:

  • the month the apprenticeship training will start
  • the apprenticeship standard.

Once a reservation has been made it can be converted into a full apprenticeship record, or a commitment, by adding the chosen apprentice’s details and being agreed by both the employer and Richmond Training.

Apprenticeships are funded in the UK through the Digital Apprenticeship Service(DAS) with the introduction of a 0.5% levy on employer’s pay bills. This levy will only be payable on pay bills in excess of £3 million per year, which is estimated to effect only 2% of employers. This is estimated to provide an estimated £3bn boost to the apprenticeships budget supporting a new wave of young learners. As part of this plan, employers will also be given an annual offset allowance of £15,000 towards the cost of the new levy.

Paying the apprenticeship levy

An employer’s pay bill will be calculated on total employee earnings subject to Class 1 secondary National Insurance Contributions (NICs), but not including benefits in kind. Employers will pay the levy to HM Revenue and Customs (HMRC) through the Pay as You Earn (PAYE) process. A person will be treated as liable for NICs even where the applicable rate is 0% (for example, where an apprentice under 25). Where two or more companies are connected, only one will be entitled to use the £15,000 annual allowance for that year.

Examples of what you will pay

An employer with an annual pay bill of £5,000,000:
• levy sum: 0.5% x £5,000,000 = £25,000
• subtracting levy allowance: £25,000 – £15,000 = £10,000 annual levy payment

An employer with an annual pay bill of £2,000,000:
• levy sum: 0.5% x £2,000,000 = £10,000
• subtracting levy allowance: £10,000 – £15,000 = £0 annual levy payment

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