Levy-paying employers will be able to transfer apprenticeship funds

Employers that pay the apprenticeship levy will be able to transfer their apprenticeship funds to other businesses from April 2018.

Guidance released by the Education and Skills Funding Agency (ESFA) said that employers would be able to transfer their apprenticeship fund to any other organisation, such as another employer in their industry or a business in their supply chain, provided that both parties were registered on the apprenticeship service.

The funds for training and assessment for an apprentice at the receiving organisation will be paid every month for the duration of the apprenticeship.

A maximum of 10% of an employer’s annual apprenticeship fund can be transferred, which will be worked out from the total amount of levy declared the previous tax year, plus a 10% top-up provided by the Government.

Employers that wish to make a transfer would be expected to fund the total cost of the apprenticeship, and cannot do so if they already employ an apprentice whose training programme is funded by a transfer.

Organisations that receive funding will not have to pay any money back to the donating employer, but if the latter runs out of money then the recipient will be asked to contribute 10% towards the cost of the apprenticeship. The remaining 90% will be funded by the Government.

The ESFA warned employers that hoped to receive transferred funding not to rush into registering for an account. “A receiving employer shouldn’t register on the apprenticeship service for a transfer until they have agreed the apprenticeship standard and their costs with the employer sending the transfer,” it added.

The ESFA is expected to release the rules surrounding funding transfers at a later date.

The CIPD last month said that 53% of employers would prefer a more flexible training levy over the apprenticeship levy to help pay for training that is more suitable for their needs. A fifth expected to write the levy off as a tax as they did not expect to use their apprenticeship allowance at all.

Carolyn Fairbairn, director general at the CBI, has called for the apprenticeship system to be reformed within six months and said businesses needed to be able to decide how money should be spent on skills and training.

“This is the time when we have to get it right – and for businesses not to be able to spend, not to find they can draw down and invest in the skills of the future, is a massive lost opportunity,” she told the BBC.