Apprenticeships funded by transfer of levy funds
Sending and receiving apprenticeship levy funds. What to do when the total cost is not covered.
New for 1 August 2022:
Text relating to rules about sending employers not being able to receive a transfer and vice
versa, has been removed as this restriction was lifted in February 2022.
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E222 - New Rule: To confirm that host employers can send transfers to Flexi-Job Apprenticeship Agencies.
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E227 - Clarification: Rule updated to confirm that the responsibility for the quality of the apprenticeship and employment of the apprentice(s) lies solely with the receiving employer.
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E240 - Clarification: Rule updated to include monitoring the details submitted in pledge applications against the actual details entered onto the apprenticeship service account when apprentice starts.
E211
Levy-paying employers can transfer a percentage of their levy funds, which were declared for the previous tax year, to other employers, including apprenticeship training agencies (ATAs) and Flexi-Job Apprenticeship Agencies (FJAAs). The transfer allowance percentage is currently set at 25%.
- E211.1 The transfer allowance will be calculated from the total amount of levy declared during the previous tax year, with the English percentage applied, plus the 10% government top-up payment. This allowance is recalculated every tax year and any unused allowance will not be carried forward.
E212
Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship standards, for new apprenticeship starts. A transfer must be agreed and put in place before an apprentice (being funded by the transfer) starts their apprenticeship. The only exception to this is where the apprentice is changing employer and an agreement to continue their apprenticeship with their new employer is via a transfer of levy funds - this must be agreed by the point the apprentice starts with their new employer.
E213
A sending employer is a levy-paying employer who wishes to transfer levy funds in their apprenticeship service account to another employer to support their delivery of an apprenticeship standard. These funds can only be used for the cost of apprenticeship training and assessment.
E214
We will calculate the transfer allowance around the start of each tax year (the calculation is based on the period 12 levy figure declared to HMRC). The transfer allowance is calculated on declared levy multiplied by the English percentage, along with the 10% automatic top up from government.
E215
If you are part of an account with connected organisations your transfer allowance will be calculated from the total levy declared by all organisations included within the account at the time of the calculation. You will not have an individual transfer account.
E216
Provided you do not exceed the transfer allowance, you are able to transfer funds to any number of employers.
E217
To send a transfer, if prompted, you must re-sign the employer agreement.
E218
Where applicable, you must agree with the receiving employer the criteria of theapprenticeship which you will fund and the price that they have agreed with their chosen main provider and end-point assessment organisation. You will need to approve these details through the apprenticeship service and ensure you do not exceed your transfer allowance.
E219
If you are facilitating the transfer via a transfer pledge and have chosen the auto-approval option, then you will not be required to review the details when the apprentice/cohort is added.
E220
By agreeing to fund an apprenticeship with a transfer, you are committing to fund the apprenticeship over its entire duration until completion. You will need to ensure that you will have enough transfer allowance to cover these costs over the relevant number of years. You will not be able to stop payments once you have approved the apprenticeship on the apprenticeship service and transfer payments will be deducted from your levy account first, prior to your own apprenticeships.
E221
The transfer amount should cover 100% of the eligible training and assessment costs, up to the funding band maximum, of the apprenticeship standard. This does not include English and maths training up to and including level 2, which is funded separately.
E222
You cannot jointly fund an apprenticeship with another levy-paying employer.
E223
If you are sending a transfer to a Flexi-Job Apprenticeship Agency, or ATA, then the transfer must be for the whole duration of the apprenticeship. You are not able to fund part of the apprenticeship duration, i.e. for the period that you host the apprentice.
E224
You must not impose conditions on the transfer, such as choosing the receiving employer’s main provider or end-point assessment organisation for them. This does notinclude any criteria that you may have set around your transfer pledge.
E225
You must not seek or accept any incentives or inducements, or any other payments not authorised by us in exchange for sending a transfer.
E226
If you are a main provider who is also a levy-paying employer (this includes any connected companies), you must not deliver training to apprentices you are funding through a transfer. This includes where you are acting as a main provider or a subcontractor.
E227
The funds that you transfer will retain their initial date of expiry; the date of transfer will not affect this.
E228
Once the transfer of levy funds has been processed, the responsibility and liability of the transfer funded apprenticeship lies solely with the receiving employer – this includes the quality of the apprenticeship and the employment of the apprentice(s). The sending employer has no accountability for that apprenticeship going forward, apart from the commitment to fund the apprenticeship over its entire duration until completion.
E229
A receiving employer is any (levy-paying or non-levy paying) employer, including Flexi-Job Apprenticeship Agencies, who receives a transfer of funds from a levy-paying employer.
E230
For the purposes of apprenticeships funded by a transfer, the receiving employer is treated as a levy-paying employer.
E231
To receive a transfer, if prompted, you must sign the employer agreement and ensure apprenticeships funded by a transfer follow the rules in this document.
E232
Once the transfer of levy funds has been processed, the responsibility and liability of the transfer funded apprenticeship lies solely with the receiving employer – this includes the quality of the apprenticeship and the employment of the apprentice(s). The sending employer has no accountability for that apprenticeship going forward, apart from the commitment to fund the apprenticeship over its entire duration until completion.
E233
The transfer amount you receive should cover 100% of the eligible training and assessment costs, up to the funding band maximum, of the apprenticeship standard. This does not include English and maths training up to and including level 2, which is funded separately.
E234
You will need to set up an apprenticeship service account if you do not already have one. You will need to enter details of the apprenticeship that the transferred funds relate to. If you already have an apprenticeship service account, you may use this to receive a transfer.
E235
The rules on what apprenticeship funding can be spent on are set out in the eligible costs section at paragraph E86.
E236
Before entering the details on your apprenticeship service account, you must:
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E236.1 Agree the transfer details with the sending employer (either by an approved pledge application or by a direct transfer connection);
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E236.2 Agree with the main provider which apprenticeship standard your apprentice will be undertaking; and
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E236.3 Confirm the price that you have negotiated with your main provider. All parties will need to approve these details through the apprenticeship service.
E237
You must not provide any incentives or inducements, or any other payments not authorised by us in return for receiving a transfer.
E238
If you do not pay the levy or have exhausted the levy funds in your apprenticeship service account and at any point the ‘sending’ employer has insufficient funds to cover the cost of your apprenticeship training, you must pay co-investment to your main provider for the remainder. The rate at which you will need to pay co-investment will depend on when the apprenticeship started. Please refer to the table in paragraph E164 for details of the rates.
E239
If you are a levy-paying employer, if at any point the ‘sending’ employer has insufficient funds to cover the cost of your apprenticeship training and you have sufficient levy funds available then these funds will automatically be used before you enter co-investment.
E240
If the total negotiated price of the apprenticeship exceeds the funding band maximum, you must pay all of the additional costs.
E241
We will monitor transfer activity to ensure apprenticeship funding is used appropriately and may take action where you do not meet the terms and conditions of using apprenticeship funding. This includes where a transfer has been created through the Pledge and Transfer Apprenticeship Funds service whereby, we will be monitoring the apprenticeship details entered in the transfer pledge application against the actual start details. These terms and conditions are set out in these funding rules and the employer agreement.