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

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The Apprenticeship Levy is a UK tax paid by employers with an annual pay bill of more than £3 million, which is used to fund apprenticeship training.

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 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.

To help employers manage this transition, and ensure that they do not lose any funds accrued in the original account, the employer should follow the below steps:

  • Remove any 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.

Please note - if there are apprentices linked to the original account that the employer has claimed the incentive payment for hiring a new apprentice for, this step may invalidate the application due to automated eligibility checks.

  • Add the details of the new/replacement legal entity to the original account. This removes the concern that the previous company has ceased trading, but it is still named on the original account.
  • Continue to fund any apprenticeships that have already begun using the original account until the funds in that account are used up. Before the funds are exhausted, the employer will need to decide, to either:
    1. Leave the apprentices on the original account and they will fall into co-investment and the employer will need to pay the co-investment due outside of the service (currently 5%), or
    2. Transfer the apprentices to their active AS account where they will continue to be fully funded, once there are sufficient funds in that account
  • If there are large amounts of funds available in the original account, and not enough apprentices to fully use the funds, the employer can continue to add new apprentices to that account until the funds are used up. Before the funds are exhausted, the employer will need follow the steps outlined above.

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.

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