Using levy funds after a change in an employer’s organisational structure

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The levy balance available to spend on apprenticeship training is displayed in each employers Apprenticeship Service (AS) account.  Whilst this funding is made available to employers to fund apprenticeship training, it is not an asset of the company, and should not be considered as such if there is a structural change.

As a result of this, we cannot currently offer the functionality to move funds between AS accounts.

If an employer's organisational structure changes

If an employer’s structure changes, for example, there is a company takeover, and the new company has legal ownership for the organisation, the new employer can retain access to existing AS accounts and direct any funds to train their staff who have already started an apprenticeship.

The employer needs to obtain legal advice to determine if they retain legal ownership of the organisation. The employer then has two options on how to manage their AS account.

Option 1:

The employer can add the new organisation(s) to their existing AS account, adding the new PAYE schemes to allow the levy funds to continue to be paid into the original account.

All apprenticeship starts must be added to the account which contains the PAYE scheme through which they are paid through to claim apprenticeship funding.

All organisations added to this account can access the accrued levy funding for their apprentices.

Option 2:

The employer may require a new AS account from the date of the merger. To help employers manage this transition, and enable them to use levy funds accrued in the original account where appropriate, the employer should follow the below steps:

  • Remove any continuing PAYE schemes that are associated with the original account and add them to the account that they want to use in the future. This will ensure levy funds are allocated to the correct account.
  • If a PAYE Scheme is removed and added to another account, the apprenticeship record will need to be moved to that account with their PAYE Scheme by recording a change of employer. This is a policy requirement of the 2022/2023 main provider funding rules

Therefore, it may be advisable to follow option 1 if appropriate for the way the account owners want to manage the account and the existing levy funds. The account owners must ensure they retain legal ownership of the original organisation to use this option.  

Please note - it is the employer’s responsibility to ensure the apprentices are being funded through their preferred account and move them at the appropriate time if they wish them to be funded through the levy funds accrued on the new account.

If this is not completed on time and co-investment is charged, this will need to be paid by the employer as outlined in the funding rules.  If co-investment is not paid in full, this will affect the completion payment that is paid to training providers.

 

 

Questions for agents to ask to ascertain the situation:

Has the employer confirmed they have legal ownership of the original organisation?

If no, then the employer will need to create a new account with the new organisation. They will no longer be able to use the accrued funds as they have no legal ownership of these. This is not an asset of the organisation and cannot be transferred to the new account.

If yes, then the existing account owners will need to determine how they want to manage their account. They will want to look:

  • The levy fund balance
  • If the organisations are connected and they want to share the levy funds that have accumulated and new funds that will be declared by the organisations

Do they want to share the levy funds with all the organisations?

If they want to share the levy funds that have accumulated and the new funds that will be declared by the organisations going forward, they can follow the advice above in option 1. This will mean they will be adding their PAYE schemes to the one account and all the listed organisations will have access to use the levy funds.

If they do not want to share the accumulated levy funds and/or they want the new levy declarations from each organisation to be in a separate account, they will need to follow the advice above in option 2. The funding rules state that any new apprenticeships starting from 1st August 2022 will need to be added to the account which contains the PAYE scheme they are paid through, therefore, the employers may not be able to use the accumulated levy funds for new apprentices if they want to use separate accounts going forward.

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