A pot of money

Using the apprenticeship levy to upskill employees

One of the most effective ways to upskill staff is with apprenticeships.

Using the apprenticeship levy to upskill existing employees

A pot of money

In today’s competitive business world, skills are every employer’s biggest asset. Companies are struggling to recruit the talent they need and skills are going out of date faster than ever – which means businesses need to upskill to keep up.

One of the most effective ways to upskill staff is with apprenticeships. And if you pay the levy, training costs are covered by your levy funds, so it’s a no brainer.

What is the apprenticeship levy?

The apprenticeship levy was introduced by the Government in 2017 to help improve the quantity and quality of apprenticeships. It’s a mandatory contribution – or tax – that large employers have to pay to support UK apprenticeships.

Do you pay the levy?

If you’re an employer with an annual wage bill over £3 million, you pay the apprenticeship levy – and have been for years. HMRC collects your levy contribution every month and transfers it into your DAS (digital apprenticeship service) account for you to spend on apprenticeship training.

24 months after the funds are collected, they expire and are taken back by the Government to allocate to SMEs. This means when it comes to the levy, you’ve got to use it or lose it.

Employers aren’t making the most of their levy

Over 500,000 employers pay £1.8 billion into the levy every year – but they’re not making the most of it. Levy-paying employers have only spent 8% of what they’ve paid in, leaving £1.29 billion left in the pot.

This is a huge amount of money employers could be investing in their business – either recruiting new apprentices or upskilling existing employees.

How to use the levy to upskill existing employees

Many employers assume that apprenticeships are just for young people learning a trade, but this isn’t the case. There are hundreds of different apprenticeships available from intermediate level all the way up to degree level, which are ideal to develop the high-level skills you need in house.

Think about your skills strategy. Do you have any skills gaps? Can any of your existing employees be reskilled or upskilled to fill the gaps? Do you have any new managers who need extra leadership training? Do you struggle with staff retention?

If you've answered ‘yes’ to any of these questions, apprenticeships are the solution.

Start by deciding the skill area you need to develop and which employees would be relevant to train. Then head to the Government’s find an apprenticeship site to find the right course and level. You can apply for the course online and pay for training using your levy funds.

Some employers are already using the levy to upskill their staff. The most popular degree apprenticeships in 2019 were chartered manager and senior leader, so it’s clear that some employers are taking advantage of the opportunity the levy brings and using their funds to develop the high-level skills they need in their business.

If you’re thinking about using apprenticeships to upskill your staff, download your ultimate guide to hiring an apprentice. It covers everything you need to know – from training providers to software.

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This article includes research and opinion sourced by OneFile at the time of publication. Things may have changed since then,
so this research is to be used at the reader's discretion. OneFile is not liable for any action taken based on this research.