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The new Apprenticeship Levy on schools and academies from April 2017

The government have announced the new Apprenticeship Levy will be coming into force next April 2017 and will cost schools 0.5% of their salary costs. The latest details from the DfE can be found here. Whilst the levy only applies to employers with a payroll of over £3 million a year, this will include nearly all maintained schools, (as their employer is the local authority), most multi academy trusts and some larger standalone academies.   

What is clear is that each employer will have to pay 0.5% of their total salary bill less a £15,000 allowance. Employers will need to let HMRC know monthly whether they need to make a payment and will need to make the first one in May 2017.

The money will be paid into a HMRC digital account for each employer who can then access this funding to support investment in apprenticeships. In addition to this the government will top those funds up by a further 10%.   

To help secure the most out of the levy for academies and schools, they will be able to access the funding to pay for apprenticeships and professional development for staff, through the online Digital Apprenticeship Service. The funding can only cover the cost of training and assessment and it cannot be used to cover the actual salary of the apprentices.

School leaders should bear in mind that the term apprenticeship can cover professional development up to level 7 ( Masters level)  and that this is not restricted to young staff. It will be key for academies and schools is to identify eligible programmes that they can deliver to use their funds. School leaders will need to consider that there will be a 24 months period for any funding to ‘use it or lose it’. 

For maintained schools, it will be critical to ensure that they can access the funding they have paid and for schools to develop plans for spending their share of the funds and then make a case to their local authority as soon as possible to claim this back. There is currently no requirement for local authorities to ring fence each school’s funding but NAHT is urging members to begin dialogue with their local authority about this as soon as possible to make it clear that they intend to develop such proposals.

There are already a number of accredited apprenticeship ‘pathways’ that academies and schools can use to develop their teaching assistants or schools business managers. (You can find out more about apprenticeship standards that already exist and those developed by employers here).  There are also opportunities for groups of schools and academies to get together to identify a programme that they would like offer from their funding that is not currently available. Apprenticeships should be focused on developing new skills that will take an employee to their next level of progression in their career.

The funding can only be spent on the training element of the apprenticeship, and not for salaries or funding a new apprenticeship.

Voluntary aided and foundation schools should be excluded if their salary bill falls under the threshold, as technically the employers are the governors or the school itself. However, confusion could possibly occur where the local authority runs their payroll as HMRC could treat them as one employer if there is one payroll number. These schools may need to separate out their payroll number if they want to be treated as the separate employer that they are.

With this new obligation on schools and academies, it is critical that they mitigate the impact by ensuring that the money they’re paying out comes back into their institution. Schools and academies need to start thinking now about how they can best utilise the apprenticeship levy.

NAHT opposed the levy that will represent an additional cost at a time when schools are already struggling to make budgets balance. Our worry is also that a lot of schools simply are not aware of the levy or that it applies to them, and we have been putting pressure on government to provide more details.

Page Published: 28/10/2016