If you're an employer with a pay bill over £3 million each year, you've probably already know you must pay the apprenticeship levy, but knowing what you can do with your unused levy funds and how you might go about transferring these to other employers has been spinning some employers into a quandary. In this piece, we run through the most commonly asked questions and queries about using unused apprenticeship levy funds.
Why would I transfer my unspent apprenticeship levy funds?
You may wish to:
- work with employers in your supply chain. Help them build their workforce, enable them to improve performance and develop experience. This would ultimately impact on their ability to work with and support your business
- get in touch with employers in your industry. A great way to network and to develop relationships with other employers within your sector
- get in touch with an Apprenticeship Training Agency (ATA), this may benefit yourself in the future as well as offering support to your levy fund transfer employer
- work with regional partners. You may create a network of local partners to support you in your sector and help you to develop and grow
How much can you transfer?
- You can transfer a maximum amount of 10% of your annual funds
- Levy-paying employers can transfer funds to a number of organisations
- The total apprenticeship levy declared to HMRC by Employer A in the 2017 to 2018 tax year was £500,000
- 90% of their wage bill goes to employees living in England so their ‘English percentage’ is 90%
- £500,000 x 90% = £450,000
- Add 10% government top-up. 10% of £450,000 = £45,000, so total is £495,000
- Employer A’s transfers allowance for 2018 to 2019 is 10% of the above total, so £49,500
This calculation will be done for you. You’ll then be able to set up a transfer and the employer/s receiving a transfer will be able to register and start adding apprentices to the service.
What can transfers pay for?
Transferred funds can only 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 not frameworks
- transfers can only be used for new starters not established staff
What do you need to do to start a transfer?
The sending employer and the receiving employer need to first agree the details of the apprenticeship; for example, which apprenticeship standard, how many apprentices, the cost.
Once both employers are registered on the apprenticeship service, the following must be done in their accounts to complete a transfer:
- connect with each other
- receiving employer to add the apprentice details
- confirm the transfer
What must you do if you 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
You should also know:
- you can’t transfer funds to another employer if you currently receive a transfer
- if you’re currently transferring funds to another employer, you can’t receive transferred funds to pay for your apprenticeships
- transfer payments will leave your apprenticeship service account first, each month
- if the apprenticeship stops, your transferred payments will stop as well
What must I do to receive a 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
- funding rules around transferring apprenticeship funds
How does State Aid affect me?
What is state aid?
10% of all the funds you receive as a transfer from another employer count as state aid.
So that you do not go over the allowed limit of €200,000 for state aid in any 3 year period, you should check:
- how much state aid you’ve already received
- if you’re part of a connected organisation, how much combined total state aid you have received