Paying for an apprenticeship

When providers will receive payments, reporting requirements and agreeing a price. Includes employer contribution towards training (co-investment) and VAT.

Paying for an apprenticeship

New for 1 August 2022:

  • E161 - Clarification: To reflect the how funding for an apprenticeship is determined.

E162

Funding for an apprenticeship is determined by whether there are levy funds available in an employer’s apprenticeship service account each month. In any particular month:

  • E162.1 If levy funds are available in your account, these will be used to pay that month’s instalment. Where the levy funds are insufficient to cover the monthly instalment, the difference will be paid through government-employer co-investment.

  • E162.2 If you do not have levy funds in your apprenticeship service account, that month’s instalment will be funded through government-employer co-investment.

The price of an apprenticeship

New for 1 August 2022:

  • E162 - New rule: We no longer require the actual delivery cost of the apprenticeship on the ILR and the apprenticeship service, where this figure is above the funding band. The price that your provider enters into both the ILR and the apprenticeship service is the funding that they are claiming from us (the maximum of the funding band minus the cost of any relevant RPL and any further discounts with the employer). They must enter the same price into the ILR and the apprenticeship service. The must make their own arrangements to collect any money due from you (the employer) if the actual value is above the funding band maximum.

We have removed the rule that said the main provider must not offset the negotiated price with the costs of any service provided by you.

E163

You and your main provider must negotiate a price for the cost of each apprenticeship, including the training costs and any subcontracted training. The price must include the cost of the end-point assessment which you must negotiate with the end-point assessment organisation.

  • E163.1 When you agree a price with the provider, their starting point must be no more than the maximum of the funding band for the standard.

  • E163.2 If the price you agree with the provider exceeds the maximum of the funding band, then you both must agree off-line (outside of the ILR and apprenticeship service) how you will pay any difference. We do not need to know about the amount of this difference. Your provider may charge VAT on the difference. This difference must not be funded from the apprenticeship service account or co-investment.

  • E163.3 The price your provider enters into the ILR and the apprenticeship service must be the same.

  • E163.4 The price your provider enters into both the ILR and apprenticeship service (for TNP1) is the maximum of the funding band minus the costs of relevant prior learning that you have agreed with the provider (see paragraphs E18 to E19). This new maximum funding amount becomes the starting point for any further negotiation on price with you (e.g. additional discounts may be applicable if the apprentice is part of a large cohort).

  • E163.5 Where you and the provider do not know the details of the end-point assessment organisation at the start of the apprenticeship, they must enter the price for end-point assessment (in TNP2) once this has been confirmed. This field in the ILR must be left blank until the price of the end-point assessment has been confirmed to ensure accuracy.

  • E163.6 The prices entered onto the ILR must not include any VAT, which may be charged on employer co-investment.

  • E163.7 The funding bands and the standards placed within them, may be subject to change.

E164

Once the price has been negotiated, we do not expect the total price of the apprenticeship to increase. The only exceptions to this are when there is a change of circumstances or when the end-point assessment cost is not known at the start of the apprenticeship and later added.

  • E164.1 If either the TNP1 or the TNP2 price changes during the apprenticeship, the reason for this change must be documented in the evidence pack. All changes must be agreed by you.

  • E164.2 We will monitor changes of price and patterns of behaviour to identify any fraudulent activity. You can find further information on changes of circumstance in the ‘change of circumstances’ section (see paragraphs E241 to E298).

Employer co-investment

New for 1 August 2022:

  • E169 - Clarification: To confirm that where, due to a change of circumstances, the employer has overpaid their employer co-investment then the provider must reconcile and refund any monies due. Where you become a levy-payer during an apprenticeship which started as a non-levy apprenticeship, co-investment must be reconciled and any overpayment addressed. Updated for version 1.

E165

Where the monthly cost of apprenticeship training cannot be fully met by funds from your apprenticeship service account (because there are insufficient funds), you must co-invest the relevant co-investment rate of the outstanding balance for that month. This rate will be the co-investment rate that was in place on the date the apprenticeship started:

Co-investment rates for apprenticeships that started:
before 1 April 2019 on or after 1 April 2019
10% 5%

Please refer to the Apprenticeships Technical Funding guide for more information about what change of circumstances affect the co-investment rate.

E166

If you do not pay the apprenticeship levy you must also co-invest at the relevant co-investment rate, towards the agreed cost of apprenticeship training (see table above). The government will pay the remaining percentage up to the funding band maximum. Where the funding band maximum is exceeded, you must pay all the additional costs above the funding band maximum.

E167

Main providers will need to invoice you separately for any employer co-investment, including any VAT.

E168

You may agree a schedule of co-investment payments with the main provider, which does not match payments made by us each month.

E169

Main providers will need to show to us that they have received your co-investment payments to justify the government’s contribution. If they cannot do that then we may withhold their completion payment. Where you are required to pay co-investment, this must be a transfer of funding visible in the main provider’s financial systems. This will typically be in the form of a main provider invoice and corresponding employer payment.

E170

You must not seek or accept any refund, in total or in part, of your co-investment contribution. The only exception to this is where a change of circumstances has taken place (for example, where you become a levy-payer during an apprenticeship which started as a non-levy apprenticeship, or the apprentice has changed employer or has withdrawn from the apprenticeship programme). In these instances, the provider must reconcile the employer co-investment they have already received and any overpayment addressed. More details can be found within the Change of circumstances section.

E171

The only exceptions to employer co-investment are:

  • E171.1 English and maths, to achieve the required government standard (see paragraphs E106 to E128);

  • E171.2 Where you qualify for extra support for small employers (see paragraphs E102 to E105);

  • E171.3 For any learning support for the apprentice (see paragraphs E68 to E69);

  • E171.4 For any additional payments (see paragraphs E92 to E98); and

  • E171.5 where you deliver to your own staff as an employer-provider.

Financial contributions by an apprentice

New for 1 August 2022:

We have moved this section from earlier in the document.

E172

The apprentice must not be asked to contribute financially to the eligible costs of training, on-programme or end-point assessment.

  • E72.1 This includes both where the individual has completed the programme successfully or has left the programme early.

  • E72.2 Costs include any co-investment or additional training and assessment costs above the funding band, that you have paid directly to the main provider where this is part of the agreed apprenticeship.

When payments are made

E173

We will pay the main provider 80% of the negotiated price (TNP1 and TNP2) up to the maximum value of the funding band, in equal monthly instalments according to the planned duration of the apprenticeship regardless of how training is scheduled over the duration of the apprenticeship. The deductions from your apprenticeship service account will mirror these payments where funds are available.

E174

We will pay the remaining balance of the negotiated price, up to the maximum value of the funding band, to the main provider when the apprentice has undertaken all the activity relevant to the apprenticeship, including completing all elements of the end-point assessment.

E175

The deductions from your apprenticeship service account will mirror these payments where funds are available.

Funds in your apprenticeship service account

New for 1 August 2022:

  • E180 - Clarification: To reflect that training providers must not have access to your apprenticeship service account unless they are operating as an employer-provider. The tasks that you give permission for are accessed through the training provider’s own account, not by giving them access to yours

  • E184 - Clarification: You must make sure that the PAYE scheme used in the apprenticeship service account for the apprentice is linked to the National Insurance number for the apprentice declared by the main provider in the ILR.

E176

You must only add PAYE schemes for you or your connected companies or charities (according to HMRC’s definition) to your apprenticeship service account.

E177

Public bodies cannot usually be connected for apprenticeship levy purposes. If you are setting up an apprenticeship service account for a public body, you must only add the PAYE scheme or schemes for one employer, that is, a government department, local authority, or non-ministerial department.

E178

There are some exceptions where public bodies are considered to be corporate bodies, companies, or charities. If your organisation is connected, as defined by HMRC employment allowance connection rules and shares one apprenticeship levy allowance, then you could set up an account with another connected employer.

E179

We will monitor accounts to check that PAYE schemes are properly used. If we have any questions, we may ask you to provide evidence that the employers sharing an apprenticeship service account are connected.

E180

You must:

  • E180.1 Remove PAYE schemes from your apprenticeship service account that are no longer operated by the employer associated with the account (or leaves the group of connected companies);

  • E180.2 Ensure the PAYE scheme for the apprentice’s employer is associated with the same apprenticeship service account which records the apprenticeship for them; and

  • E180.3 Manage users associated with your account including:

    • E80.3.1 Removing users who are not authorised to act on your behalf; and

    • E180.3.2 Controlling who can add users.

E181

Where your apprenticeship service account is used to fund training and assessment, you are responsible for recording the required details of the apprenticeship in your account. Training providers must not have access to your Apprenticeship Service account, unless operating as an employer-provider. Through your service account you can give the main provider permission to enter this information on your behalf but you will need to authorise the apprentice details so we can use your apprenticeship service funds to pay for that apprentice’s apprenticeship. The tasks that you give permission for are accessed through the training provider’s own account, not by giving them access to yours.

E182

Only you can confirm the spending of funds from your apprenticeship service account. You must not delegate this function to the main provider and they must not take on this responsibility.

E183

You must not allow any third party to authorise payments through your apprenticeship service account.

E184

To be funded from your apprenticeship service account, the data entered into the apprenticeship service account must correspond with the information submitted by the main provider to us each month through the ILR. Payments to your chosen main provider will only be made if these details match.

E185

You must make sure that the PAYE scheme used in the apprenticeship service account for the apprentice is linked to the National Insurance number for the apprentice declared by the main provider in the ILR.

E186

If we withhold payments to the main provider because there is not a match, we will reconcile the payments due to the main provider when the data matches and make the corresponding changes to your apprenticeship service account.

E187

You must not ask for, or demand, a fee from a main provider or an intermediary for access to funds in your apprenticeship service account.

E188

As a result of retrospective changes to the amount of apprenticeship levy declared to HMRC, the balance in your apprenticeship service account could go up or down. If an adjustment reduces your balance to a negative value that persists, we may ask you to pay us this value, discounted by the co-investment rate in place when the apprenticeship started. We will provide you with details of this payment including the amount due and when to make a payment.

E189

If your organisation is subject to structural changes, including mergers and acquisitions, you must contact us.

Reservation of funds by non-levy employers

New for 1 August 2022:

  • E190 - Clarification: To reflect that training providers must not have access to your apprenticeship service account unless they are operating as an employer-provider. The tasks that you give permission for are accessed through the training provider’s own account, not by giving them access to yours.

E190

If you do not pay the levy, you can reserve funds using the apprenticeship service to access apprenticeship funding. More information on reservation of funds can be found in Apprenticeship funding in England.

E191

Where you are using the apprenticeship service to reserve funds to fund training and assessment, you are responsible for recording the required details of the apprenticeship. Training providers must not have access to your Apprenticeship Service account, unless operating as an employer-provider. You can give providers permission to reserve funding on your behalf but these are accessed through the training provider’s own account, not by giving them access to yours. It is your responsibility to ensure the accuracy of information within the reservation. The information in your apprenticeship service account must correspond with the information recorded on the ILR.

E192

Reserved funds are classed as government-employer co-investment and all rules associated with government-employer co-investment must be followed when using reserved funds. Please see E164 to E174.

E193

Funding cannot be secured through both reservations and via contracted provision, for a single apprentice on an apprenticeship unless:

  • E193.1 An apprenticeship was funded via contracted provision and following redundancy needs to be funded via a reservation to allow an apprentice to continue / complete their apprenticeship with a new employer.

  • E193.2 An apprenticeship was funded via contracted provision and following provider failure needs to be funded via a reservation to allow an apprentice to continue / complete their apprenticeship with a new provider.

E194

Each reservation is linked to your account. If a provider reserves funds on your behalf, you can use this reservation with any provider. You can change the provider at any time up to the point of the commitment.

E195

If you and a provider are planning to use reserved funds to fund an apprentice, you must reserve funds in advance of recruitment, or an offer of an apprenticeship being made to an existing employee.

E196

When making a reservation you, or the provider, must declare:

  • E196.1 The month the apprenticeship training will start; and

  • E196.2 The apprenticeship standard

E197

Reservations can only be used for:

  • E196.1 New apprenticeship starts; and

  • E196.2 Re-starts where:

    • E197.2.1 The apprenticeship was funded via contracted provision and following redundancy needs to be funded via a reservation to allow an apprentice to continue / complete their apprenticeship with a new employer.

    • E197.2.2 The apprenticeship was funded via contracted provision and following provider failure needs to be funded via a reservation to allow an apprentice to continue / complete their apprenticeship with a new provider.

E198

Where funds have not been reserved before the apprenticeship start or re-start date, you, or the provider, must reserve funds no later than the end of the calendar month in which the apprentice starts or re-starts.

E199

Where an apprenticeship has started or re-started and funds have not been reserved, if you want to use reserved funds to fund that apprenticeship, you, or the provider, must reserve funds for a future available month. You and the provider must re-start the apprentice on their apprenticeship and re-determine eligibility in line with the start date confirmed in the reservation. This includes, where applicable, updating the apprenticeship agreement and training plan.

E200

An ILR cannot be submitted where funds have not been reserved for a start or re-start and a commitment has not been made for an apprentice, with matching details.

E201

If you or the provider have made a reservation we will guarantee funds, subject to the reservation being converted into a commitment and the rest of the funding rules being met. Eligibility is determined at the start of an apprenticeship programme, not on the date of reservation.

E202

Following a reservation:

  • E202.1 A commitment must be made on the apprenticeship service. Information on how to convert a reservation to a commitment can be found on GOV.UK.

  • E202.2 All ILR fields must be accurately completed for an apprentice as required in the [ILR specification}(https://www.gov.uk/government/publications/ilr-specification-validation-rules-and-appendices-2019-to-2020).

E203

Reservations will expire if they are not used within 3 months of the start date detailed within the reservation. If the reservation expires before the apprentice starts, you or the provider will need to make a new reservation. New reservations are subject to government funds being available.

E204

If a change of circumstance occurs that results in the need for a new reservation on the apprenticeship service, you (or the provider) must contact the apprenticeship service support desk. You will have used a reservation creating the original commitment for the apprentice and must not make a second due to change of circumstances. More information on when to contact us can be found in the change of circumstances section.

Qualifying days for funding

E205

To qualify for apprenticeship funding the apprentice must be in learning for a minimum of 42 days between the learning start date and learning planned end-date.

E206

Where funding is paid for an apprentice who does not subsequently meet the qualifying period, we will recover the funding from the main provider. These funds will be returned to your apprenticeship service account.

Subsidy control

E207

Funds received by main providers from your apprenticeship service account (including government top-ups to funds), government-employer co-investment and additional payments, do not fall within the scope of subsidy control from 1 August 2022 to 31 July 2023.

E208

The waiving of the employer contribution for small employers is subject to subsidy control regulations. For more information on Subsidy Control, please visit the subsidy control guidance on GOV.UK.

E209

Transfers of funds are subject to subsidy control regulations. For any transfer you receive, a percentage of the transferred funds will count towards your Small Amounts of Financial Assistance exemption. This percentage represents the amount of co-investment you would have otherwise had to contribute towards the apprenticeship, if funds had not been transferred. The percentage rate is dependent on when the apprenticeship started – for further information about these rates, please refer to the table in paragraph E164.

E210

You must complete a subsidy control declaration for funding you receive as a result of the waiver of the employer contribution for small employers and transfers. You must give this to the main provider to keep in the evidence pack. If you have any concerns about exceeding your Small Amounts of Financial Assistance exemption, please contact your main provider for further guidance.