Guide to transferring your levy funds

As of April 2019, levy-payers will be able to transfer up to 25% of their funds to as many organisations as they like. The 25% transfer amount is the total amount of levy declared in the previous tax year with the English percentage applied plus the payment of 10% from the government. We’ve found this has often been used to provide funds for charities or businesses in their supply chain. Other ways to transfer include with:

  • employers you currently work with
  • other employers in your industry
  • an Apprenticeship Training Agency (ATA)
  • regional partners

Why transfer your funds?

Large organisations may find that their levy pot is simply too large for them to use on their business alone. Small businesses benefit from levy transfers as the training costs them nothing, unlike co-investment which requires them to pay 5% of the total cost of the apprenticeship training. For example, the funding amount for Digital Marketer is £11,000, meaning with levy transfer they save £550.

What can funds be spent on?

Transferred funds are treated the same as regular levy funds. They can only be spent on the training and end-point assessment costs of an apprenticeship (membership fees, non-mandatory exams, etc aren’t covered by the levy). They can also only be spent on apprenticeship standards and not frameworks. Transferred funds can only be used on new starts, including new hires and ‘in the business’ starts. They can’t be used to fund the training for apprentices already on an apprenticeship.

How to start a transfer

It’s important that both businesses involved in the transfer have agreed on how many apprentices will be funded, the apprenticeship standard they’re on and the subsequent cost of the training that needs to be transferred. You’re both (including the non-levy payer) required to register on the apprenticeship service in order to carry out the transfer. To carry out the transfer you then to connect with each other in the apprenticeship service and then the employer receiving the funds then enters the apprentice(s) details. Once that’s done then the transfer should be complete.

As the levy payer

Before you make a transfer from your apprenticeship account, make sure that you:

  • have enough funds to transfer
  • have a clear understanding of the forecasted cost to you, which will cover the duration of the apprenticeship
  • understand you will be funding the total cost of their apprenticeship and not just the co-investment

You should also know:

  • you can’t transfer funds to another employer if you currently receive a transfer
  • if you’re currently transferring funds to another employer, you can’t receive transferred funds to pay for your apprenticeships
  • transfer payments will leave your apprenticeship service account first, each month
  • if the apprenticeship stops, your transferred payments will stop as well

As the receiving employer

You must be aware of the following:

  • you’ll need to sign an agreement with the Education and Skills Funding Agency (ESFA)
  • transfer payments will be made monthly from the sending employer to your apprenticeship account
  • if the employer sending you funds runs out of funds, it will then be funding by co-investment
  • a transfer can fund up to the funding band maximum of a standard, if the cost of training is more, you’ll have to pay the difference to the training provider
  • if a training provider transfers funds to you, they cannot deliver the training for that funded apprenticeship

Funding rules still apply to both employers and if the apprenticeship stops then the funding will stop too. If you’re interested in transferring a portion of your funds or would like to find out more information about levy transfer, please get in touch. Arch Apprentices are one of the leading providers of digital, IT, HR and finance apprenticeships. We have nearly ten years’ experience of apprenticeships and have been consulting businesses on the levy since it was first announced in the 2015 budget.

Stephanie Khan

Posted April 25, 2019