Help & Guidance - 09 06 2022

Get The Most Out of Your Apprenticeship Levy

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Now you’re paying the apprenticeship levy, you’ll want to be sure you’re getting the best training possible for your organisation.

At Babington, we work with employers to design and deliver training programmes that are perfectly suited to their needs.

Whether you’re looking to take on brand new apprentices, or develop your in-house training, get in touch to find out how we can help.

What is the apprenticeship levy?

As an employer with an annual pay bill of more than £3 million, you pay 0.5% of this towards the apprenticeship levy through PAYE each month.

You have an allowance of £15,000, which reduces the amount you need to pay towards the levy.

As well as the allowance, the government tops up your levy payments by 10% in your digital apprenticeship service account. So, for every £1 you pay towards the levy, this will become £1.10.

How do Levy payers use the apprenticeship levy?

You’ll use your levy funds through your government apprenticeship service account. This is where you’ll receive your 10% top up and make payments for training. Companies will lose their funds if they don’t spend it within 24 months.

If you are in a group of companies paying the levy together, your group can collect funds in a single account. The government currently allows levy-paying employers to transfer up to 25% of funds entering their apprenticeship service account to other employers. They can transfer funds to any employers or apprenticeship training agency.

What can you use the levy for?

You can use your levy funds for apprenticeship training and end-point assessments for apprentices who work in England for at least 50% of the time. The levy covers your apprentice’s training and assessment within the scope of the framework or standard they’re following, and not things like wages and expenses. If the costs of training and assessment exceed the funding band maximum, you will need to pay the difference from your own training budget.

What are the benefits of bringing on apprentices?

Hiring an apprentice allows you to adapt their training, making them a valuable asset towards improving your organisation’s skills gaps. Other benefits include:

  • Apprenticeships provide businesses with a strong talent management strategy
  • Apprenticeships enable employees to grow, develop and get qualified.
  • Apprentices are eager to learn
  • Apprenticeships improve the productivity of staff


Find out more about the benefits of hiring an apprentice, here.

How do you access and manage your levy pot?

The Apprenticeship Service

To access your apprenticeship levy funds and pay for apprenticeship training, you need to register and use the Apprenticeship Service. All apprenticeships are arranged through the apprenticeship service and it is is designed for employers access training for apprenticeships, utilise their levy funds and manage all apprentices enrolled on programme.

The AS was first introduced in February 2017 as part of the apprenticeship reforms. It puts employers in control of how they utilise their levy funds, puts them in control how which providers they chose to work with to provide apprenticeship training and manage the number of apprentices they take on.

As an employer you can set up an account on the AS in order to view all of the apprenticeships and providers that are ready to deliver the programme you are looking for.

In order to create your account you will need one of the following:

  • Government gateway login for your organisation
  • Your accounts office reference number for your organisation.

Once you have created your account, you will need to sign an agreement with the ESFA before you can access and utilise your apprenticeship levy funds.

You can access the AS, here.

All employers need to create an apprenticeship service account to get funding to pay for apprenticeship training and assessment costs. They can either create an account straight away or add their organisation’s details, PAYE scheme and sign the agreement later.

Employers with an annual pay bill over £3million must add a PAYE scheme to:

  • Get apprenticeship funding
  • View financial transactions
  • Create an apprenticeship vacancy
  • Agree a training commitment with a training provider

Employers with an annual pay bill under £3 million must either add a PAYE scheme or their accounts office reference number. These employers will also be able to reserve funding for apprenticeships.

Employers cannot access these services in their account until they add their PAYE scheme or accounts office reference number, then sign the employer agreement.

The Apprenticeship Service – Your Account Overview

The AS account lets you manage your apprentices, finance and account details. Funds within your account cannot be accessed until you have signed the ‘Employer Agreement’.

The employer agreement is a legal contract between your organisation and the Education and Skills Funding Agency (ESFA). You must accept and follow it to access government funding for training and assessing apprentices. You can accept the employer agreement in your apprenticeship service account. View the full agreement, share or print it here.

Every employer that takes on apprentices must sign an employer agreement. It is the same for all employers and includes the terms and conditions of:

  • Using the apprenticeship service
  • Using government funding to train and assess apprentices
  • Working with the ESFA

Inviting additional team members to manage your account:

You can invite team members to access your organisation’s apprenticeship service account. There are 3 different levels of access you can give your team members after they set up their own account. They can either:

  • View information but not make any changes
  • Add apprentices and view information
  • Have full access to your account

You should give at least one other team member full access. This means that if the account owner is on holiday or leaves the organisation, someone else can sign an agreement or make changes. You can change or remove access levels after you invite team members.

If you’re having trouble managing accessing your levy funds, you can always give us a call!

What if you want to spend more than you have in your account?

When you’d like to benefit from more apprenticeships than your account will currently fund, you’ll move onto ‘co-investment’. This is where the government funds 95% of your apprenticeship training and assessment costs, and you pay the other 5% (previously 10%).

Payment incentives for employers

Employers who take on an apprentice aged 16-18, or an apprentice aged 19-24 who has previously been in care or who has a Local Authority Education, Health and Care plan, will receive £1,000 to help with any additional training and support costs.

The £1,000 will be paid to the employer in two equal instalments at month 3 and month 12 of the apprenticeship.

Non-Levy payers – What funding is available for you?

If your annual pay bill is less than £3 million and you’d like to benefit from apprenticeships in your organisation, you’ll fund this through co-investment. This is where you’ll contribute 5% to the costs of training and assessing your apprentices, and the government will fund the remaining 95%.

For smaller companies with fewer than 50 employees, the government will pay all the costs for new apprentices aged 16 to 18 and those aged 19 to 24 who are leaving care or have a Local Authority and Healthcare plan.

We were seeking to work closely with a provider that could deliver a Housing and Property related specific apprenticeship that suited our wants and needs. Babington were able to offer and deliver a solution that met our core requirements. We have consistently placed apprentices with Babington as we feel that our needs are being met and we look forward to working with them for many more years to come!


Chris Wilkinson

Group Training Manager - Leaders Romans Group

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