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:

  • P205 - Clarification: To reflect how funding for an apprenticeship is determined.

P206

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:

  • P206.1 If levy funds are available in an employer’s 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.

  • P206.2 If the employer does not have levy funds in their 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:

  • P206 - 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 you enter into both the ILR and the apprenticeship service is the funding that you are claiming from us (the maximum of the funding band minus the cost of any relevant RPL and any further discounts with the employer). You must enter the same price into the ILR and the apprenticeship service. You must make your own arrangements to collect any money due from the employer if the actual value is above the funding band max.

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

P207

Employers and main providers must negotiate a price for the total cost of each apprenticeship, including the training costs and any subcontracted training. The price must also include the cost of the end-point assessment which the employer must negotiate with the end-point assessment organisation.

  • P207.1 When you agree a price with the employer, your starting point must be no more than the maximum of the funding band for the standard.

  • P207.2 If the price you agree with the employer exceeds the maximum of the funding band, then you must agree off-line (outside of the ILR and apprenticeship service) how the employer will pay any difference. We do not need to know about the amount of this difference. You may charge VAT on the difference. This difference must not be funded from the apprenticeship service account or co-investment.

  • P207.3 The price you enter into the ILR and the apprenticeship service must be the same.

  • P207.4 The price you enter into both the ILR and apprenticeship service is the maximum of the funding band minus the costs of relevant prior learning that you have agreed with the employer (see paragraphs P25 to P26). This new maximum funding amount becomes the starting point for any further negotiation on price with the employer (e.g. additional discounts may be applicable if the apprentice is part of a large cohort).

  • P207.5 Where you and the employer do not know the details of the end-point assessment organisation at the start of the apprenticeship, you 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.

  • P207.6 The prices entered onto the ILR must not include any VAT, which may be charged on employer co-investment.

  • P207.7 The funding bands and the standards placed within them, may be subject to change.

P208

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.

  • P208.1 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 the employer.

  • P208.2 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 P261 to P323).

Employer co-investment

New for 1 August 2022:

  • P209 - Clarification: To reflect how funding for an apprenticeship is determined.

  • P210 - Clarification: To reflect that where an employer becomes 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.

P209

Where apprenticeship training is not funded from the employer’s apprenticeship service account (non-levy paying employers and levy paying employers with insufficient funds), employers must co-invest the relevant co-investment rate of the total negotiated price up to the funding band maximum. The rate at which co-investment will need to be paid will depend on the date the apprenticeship started –see table below for details of these rates.

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

P210

Where an employer becomes a levy-payer during an apprenticeship, which started as a non-levy apprenticeship, levy funds available in an employer’s account 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 (see paragraph P204). Where the total negotiated price has exceeded the funding band maximum, the employer must pay all the additional costs above the funding band maximum in full.

  • P210.1 Please refer to the Apprenticeships Technical Funding guide for more information about when a change of circumstance affects the co-investment rate.

P211

We will continue to make payments to you provided you record that you have collected the employer’s contribution. You must keep evidence that these contributions have been collected. You must not return, in total or in part, the employer’s contribution once the co-investment has been collected – the only exception is where a change of circumstances has taken place (for example, where an employer becomes 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 employer co-investment must be reconciled and any overpayment addressed. More details can be found within the Change of circumstances section.

P212

We may withhold the final completion payment until all the necessary employer co-investment has been collected (as detailed in the Apprenticeship Technical Funding Guide).

  • P212.1 You will need to invoice employers separately for any employer co-investment, including any VAT if applicable.

  • P212.2 You may agree a schedule of co-investment payments with the employer which does not match monthly payments made by us, provided the employer has paid a matching co-investment payment (at the rate set at the time the apprenticeship started – see table in paragraph P208 for details).

  • P212.3 You must have collected and recorded (on the ILR) at least the amount of co-investment required for the whole programme up to the month before the completion payment is due, not counting any co-investment which might be required for the completion element itself.

P213

The only exceptions to employer co-investment are:

  • P213.1 English and maths, to achieve the required government standard (see paragraphs P132 to P154);

  • P213.2 Where the employer qualifies for extra support for small employers (see paragraphs P127 to P131);

  • P213.3 For any learning support for the apprentice (see paragraphs P77 to P88);

  • P213.4 For any additional payments (see paragraphs P109 to P118); and

  • P213.5 Where an employer delivers to their own staff as an employer provider.

P214

Throughout the financial year you should regularly:

  • P214.1 Have collected the matching co-investment from employers; and

  • P214.2 Report the cash value, on the ILR, of total employer contributions received (see paragraph P211.3).

P215

The employer co-investment must be a transfer of funding visible in your financial systems. This will typically be in the form of a main provider invoice and corresponding employer payment.

Financial contributions by an apprentice

New for 1 August 2022:

  • We have moved this section from earlier in the document.

P216

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

  • P216.1 This includes both where the individual has completed the programme successfully or has left the programme early.

  • P216.2 Costs include any co-investment or additional training and assessment costs above the funding band, that the employer has paid directly to the main provider where this is part of the agreed apprenticeship.

When payments are made

New for 1 August 2022:

  • P216 to P220 - Clarification: To reflect that all government-funded apprenticeships are funded through the Apprenticeship Service.

P217

Where levy funds are used to fund training, we will pay 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.

P218

Where apprenticeship training is not funded from an employer’s levy funds (non-levy payers and levy payers with insufficient funds), we will pay 80% of the government co-investment funding in equal monthly instalments according to the planned duration of the apprenticeship, regardless of how training is scheduled over the duration of the apprenticeship. Our monthly instalments will need to be matched with equivalent employer co-investment payments (set at the rate at the time the apprenticeship started – see table in paragraph P208 for details) and evidenced throughout the financial year.

P219

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

P220

Where apprenticeship training is not funded from an employer’s levy funds (i.e. non-levy payers and levy payers with insufficient funds), to be eligible for the completion payment (described in paragraph P218) you must have:

  • P220.1 Collected the co-investment from the employer; and

  • P220.2 Reported the cash value of the employer co-investment on the ILR.

P221

You can find detailed information about how funding is calculated in the apprenticeship technical funding guide.

Value added tax (VAT)

P222

Supplies of training or end-point assessment, which are paid by government funding, including the apprenticeship levy, are exempt from VAT. This includes additional payments (see paragraphs P109 to P126). Prices entered onto the ILR must not include VAT (see paragraph P224).

P223

You are responsible for determining the VAT treatment on your invoices to employers.

P224

We do not provide advice on VAT. You must always seek your own advice on VAT from HMRC if you are in any doubt about VAT treatment.

P225

If you add VAT to invoices and the employer is VAT registered, the employer may be able to recover that VAT through its VAT returns. In determining the costs of training or end-point assessment, an employer will need to check with you if VAT will be added and verify, internally or with HMRC, if it can be recovered.

Funds in an employer’s apprenticeship service account

New for 1 August 2022:

  • The heading of this section has been changed to reflect that all employers are now funded through the apprenticeship service.

  • P225 - Clarification: To clarify responsibilities for the employer’s apprenticeship service account.

P226

Where the employer’s apprenticeship service account is used to fund training and assessment, employers are responsible for recording the required details of the apprenticeship. Training providers must not have access to the employer’s Apprenticeship Service account unless they are operating as an employer-provider. Employers can give you permission to carry out tasks on their behalf, but these must be accessed through your own account. The information in the employer’s apprenticeship service account must correspond with the information recorded on the ILR.

P227

Only the employer can confirm the spending of funds from their apprenticeship service account. An employer must not delegate this function to you, and you must not take on this responsibility.

P228

In certain circumstances we may need to adjust the balance in an employer’s apprenticeship service account as a result of retrospective changes to the amount of apprenticeship levy declared to HMRC. These adjustments could be up or down. An adjustment which reduces the value in their apprenticeship service account might have affected payments already made to you. Where there would have been insufficient funds in the employer’s apprenticeship service account, we will take responsibility for these payments and the employer will be required to pay co-investment direct to us. If this happens, we will provide you with details of the co-investment value, as you may need this for accounting purposes.

Reservation of funds by non-levy employers

New for 1 August 2022:

  • P229 - Clarification: To clarify responsibilities for the employer’s apprenticeship service account.

P229

Employers who do not pay the levy 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.

P230

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

P231

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 paragraphs P207 to P213).

P232

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

  • P232.1 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.

  • P232.2 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.

P233

Each reservation is linked to an employer and their account. If you reserve the funds on behalf of an employer, they can use this reservation with any provider. The employer can change the provider at any time up to the point of the commitment.

P234

If you and the employer 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.

P235

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

  • P235.1 The month the apprenticeship training will start; and

  • P235.2 The apprenticeship standard

P236

Reservations can only be used for:

  • P236.1 New apprenticeship starts; and

  • P236.2 Re-starts where:

    • P236.2.1 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.

    • P236.2.2 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.

P237

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

P238

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 employer, must reserve funds for a future available month. You 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.

P239

You cannot submit a start or re-start in the ILR where funds have not been reserved and a commitment has not been made for an apprentice, with matching details.

P240

If you or the employer 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.

P241

Following a reservation:

P242

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 employer will need to make a new reservation. New reservations are subject to government funds being available.

P243

If a change of circumstance occurs that results in the need for a new reservation on the apprenticeship service, you 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

P244

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

P245

If a learner withdraws without completing one episode of learning, for example without attending the first class, then they must not be included in the ILR.

P246

Where funding is paid for an apprentice who does not subsequently meet the qualifying period, we will recover the funding from you.

Subsidy control

P247

Funds received by main providers from an employer’s apprenticeship service account (including government top-ups to funds), government-employer co-investment and additional payments (paragraphs P109 to P126) do not fall within the scope of subsidy control from 1 August 2022 to 31 July 2023.

P248

Waiving of the employer contribution for small employers is likely to amount to subsidy control and the subsidy control rules will therefore apply to such cases. For more information on Subsidy Control, please visit the Subsidy Control guidance on GOV.UK.

P249

Transfers of funds between employers also engage the subsidy control rules. For any transfer an employer receives, a percentage of the transferred funds will count towards the employer’s Small Amounts of Financial Assistance exemption. This percentage represents the amount of co-investment the employer 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 P208. You must ensure the employer completes a subsidy control declaration for relevant funding they receive as a result of the waiver of the employer contribution for small employers and transfers. You are responsible for retaining a copy of this declaration in the evidence pack.

P250

If you become aware that an employer exceeds their Small Amounts of Financial Assistance exemption of 325,000 Special Drawing Rights (that is, approx. £340,000 at current exchange rates) over a rolling 3 year period, you must contact us.