The clocks go forward at the end of March and April 5th is looming. So, businesses, you need to act now! Have you used your Apprenticeship Levy allowance? No? Because as the end of the tax year approaches, any large businesses across the UK that have not used it, will lose it, into the Treasury’s coffers. It’s time to seize an opportunity to invest in your workforce, drive innovation, and secure a competitive edge.

Understanding the Apprenticeship Levy

Apprentice Levy Allowance: a young girl sits at a table with a laptop smiling back to the camera — Introduced in April 2017, the Apprenticeship Levy is a government initiative to boost investment in employee training and development. UK employers with an annual pay bill that exceeds £3 million must contribute 0.5% of their total payroll to the levy. Currently, this only accounts for about 2% of businesses in the UK. The funds are then held in a digital account and can only be used to pay for apprenticeship training and assessments.

The levy works for smaller businesses too, that do not meet the £3 million payroll threshold. As outlined, in the Government's 'Employing an Apprentice' guidelines, non-levy-paying employers only need to contribute 5% towards the cost of apprenticeship training, with the government covering the remaining 95%. This, therefore, allows smaller businesses to access high-quality apprenticeship programs, like their larger counterparts, but at a significantly reduced cost.

Additionally, with changes made in April 2024, larger employers can now transfer up to 50% of their unused levy funds to smaller businesses. This change helps to further bridge skills gaps across industries. Some may question why the contributing companies would do this. Well, this is a major opportunity for them to support supply chains, industry partners, and local businesses ensuring more of their levy contributions are put to good use. So, if you are unable to fully utilize your apprenticeship levy, you can transfer up to half of your funds to help smaller businesses invest in apprenticeship training instead.

The £15,000 Apprenticeship Levy Allowance

Every levy-paying employer is entitled to an apprenticeship levy allowance of £15,000 per year. This allowance is deducted from their total levy contribution, reducing the overall cost of the levy. However, this allowance does not carry over into the new tax year. If it is not claimed and used before April 5th, it is lost, again into the Treasury’s pot. Surely this must give you some incentive to take advantage of the Levy scheme now. But, how does it work? Isn’t it just a ‘kind of tax’?

Let’s Explore How it Works.

Apprentices of mixed races in a training room sat at a large table: Apprentice Levy Allowance — Once a business contributes to the levy, the funds are held in a digital account accessible through the Apprenticeship Service. Employers can draw from this account to cover the costs of approved apprenticeship training and assessment. However, there's a catch: if these contributory funds remain unspent after 24 months, they expire and, yes, you’ve guessed it, are reclaimed by the government. Let us explain:

Understanding the 24-Month Expiry Rule

The levy operates on a rolling 24-month basis, meaning funds enter your digital account every month based on your payroll contributions. However, any funds that remain unused, after 24 months, are automatically removed from your account and redirected to the Treasury. This process happens continuously, month by month, which means businesses lose money regularly if they do not act, such a waste!

For example, if your business paid into the levy in April 2022 but had not allocated those specific funds to an apprenticeship by April 2024, the money would expire and be absorbed by the government. Please remember, unlike the Levy Allowance, this is not a one-time annual deadline. On the contrary, it’s an ongoing cycle, making it crucial for businesses to plan their apprenticeship programs effectively to avoid losing funds.

The Urgency: Use Your Apprenticeship Levy Allowance or Lose It

Therefore, let’s get back to the end-of-tax-year deadline and our urgent appeal for you to spend! With April approaching you need to act now to claim your £15,000 apprenticeship levy allowance. In addition to this, unspent levy funds that are 24 months old (in April) will also expire. This means that as we approach the end of the tax year, significant amounts of unutilized funds are at risk of being lost. This "use it or lose it" policy is designed to encourage timely investment in apprenticeships, but it also places pressure on businesses to act swiftly. If you are not sure where to turn from here, keep reading, we can help. Please, don’t become part of the statistics you're about to see below.

The 2023-24 Apprenticeship Levy Underspend

Apprentice Levy Allowance: 3 apprentices in an office laughing, female is in the middle — According to recent Department for Education reports, £60 million of apprenticeship funding will be returned to the Treasury for the 2023-24 financial year. While this is an improvement from the £96 million underspend in the previous year, it still represents a major shortfall in businesses taking advantage of the levy system.

However, the situation is even more concerning when looking at the total apprenticeship levy allowance intake. Fe Week outlined that between April 2023 and January 2024, employers contributed £3.170 billion to the levy, with a projected total of £3.9 billion by the end of the financial year. After accounting for funds allocated to the devolved nations, approximately £875 million in levy-generated funds remain unspent and will be retained by the Treasury. This is shocking! All those wasted opportunities to invest in future generations and to develop your teams. The time to act is now!

Why Businesses Are Not Spending Their Apprenticeship Levy Allowance

Why do we need to highlight this issue? It’s simple, many companies are failing to use their apprenticeship levy allowance. Here are the main reasons why:

• Complexity and Bureaucracy: The system can seem overwhelming, deterring businesses from engaging fully.

• Misalignment with Business Needs: Some organizations struggle to find relevant apprenticeship programs. However, it is important to point out here that apprenticeships do not just cover traditional engineering and industrial trades. On the contrary, there is a massive scope for you to invest in business apprenticeships too.

• Outdated Perceptions: Many businesses still believe apprenticeships are only for school leavers, rather than upskilling existing employees. Please note: apprenticeships provide qualifications from the equivalent of GCSE level, all the way up to degree level, and are for all ages.

The Consequences of Not Using Your Apprenticeship Levy Allowance

Think about it. If you don't use your apprenticeship levy allowance, your business loses more than just money. It is also losing out on:

• Missed Workforce Development: Apprenticeships provide structured, tailored training to fill skills gaps.

• Lower Employee Retention: Investing in staff training increases loyalty and job satisfaction.

• Competitive Disadvantage: Skilled employees drive innovation and business growth.

Swarm Training: Your Partner in Maximizing Levy Benefits

Apprentice Levy Allowance 2 girls learning welding — At Swarm Training, we understand the challenges businesses face in navigating the Apprenticeship Levy landscape. Our mission is to demystify the process and empower organizations to transform their levy contributions into tangible benefits.

How We Can Help:

Strategic Consultation: We work closely with you to identify skills gaps and align apprenticeship programs to your strategic

Tailored Program Development: Our team designs bespoke apprenticeship pathways that cater to your industry and organizational culture.

Quality Training Delivery: Our network of experienced trainers delivers high-quality, relevant training that equips your employees with the skills they need to excel. Just look at the amazing companies we have already partnered with.

Ongoing Evaluation: We provide continuous support to assess the impact of apprenticeship programs and make necessary adjustments to maximize your ROI.

Act Now: Secure Your Competitive Edge

The end of the tax year is fast approaching, and with it, the potential loss of valuable training funds. This is a key moment in time for your business. It is time to invest in your most important asset—your people. By using the Apprenticeship Levy effectively, you can:

• Build a Resilient Workforce: Equip your team with the skills to navigate future challenges and drive success.

• Foster a Culture of Continuous Improvement: Encourage ongoing development and adaptability within your organization.

• Enhance Reputation: Demonstrate your commitment to employee growth and corporate social responsibility.

Conclusion: Seize the Opportunity

Apprentice Levy Allowance: a young male apprentice electrician in blue overalls and yellow hardhat — The Apprenticeship Levy with its apprenticeship levy allowance is a strategic tool for business growth and innovation. However, the benefits are only realised when businesses take proactive steps to utilize their funds effectively, otherwise, it will just feel like yet another Government tax.

At Swarm Training, we're here to guide you through this process. We will ensure that your levy contributions translate into meaningful development opportunities for your workforce. Don't let this opportunity slip away. Contact us today to unlock the full potential of your Apprenticeship Levy funds, utilize your apprenticeship levy allowance, and drive your business forward.

‘Over the years I've learned that investing in other people's success doesn't just make them more likely to enjoy working with me. It also improves my own chances of survival and success.’ — Chris Hadfield

Apprentice Levy Allowance: Businesses, Quick, The Clock is Ticking