Budget 2018: Hammond Announces Updates to the Apprenticeship Levy



Phillip Hammond’s got his little red suitcase out again which means it must be Budget time!

As usual, there was a lot packed into the chancellor’s speech including plans for public spending, taxes and duties and rather bizarrely a Brexit commemorative 50p coin.

In amongst all these announcements were some updates concerning Apprenticeships and the Apprenticeship Levy. If you’ve not had time to dig through all the proposed plans just yet, here’s a quick summary of what Hammond announced.  


£695 million is earmarked to support Apprenticeships

The £695 million package will fund all of the announced apprenticeship changes as well as boosting the funding of the Institute for Apprenticeships and National Apprenticeship Service, the National Retraining Scheme, employers in Greater Manchester and new ‘skills pilots’.


A rise in Apprentice minimum wage

From April 2019, the national minimum wage for apprentices will rise from £3.70 to £3.90. This extra 20p an hour gives a rise of 5.4% and is in line with last year’s rise from £3.50.

Last year’s rise came after the independent Low Pay Commission submitted its recommendations for increases across all minimum wage rates to the Government.

It seems the Chancellor is keen to continue to take on board these recommendations as his Budget also announced increases across all National Minimum Wage rates including the National Living Wage which will go up to £8.21 in April.




Transfer cap raised from 10% to 25%

This one was announced earlier at the Conservative Party Conference, but in case you missed it, here’s the low-down.

From April, levy-paying firms will be able to transfer 25% of their fund to support apprentices in their supply chain. This should encourage firms to use a higher proportion of their Levy as most firms are under-utilising it at the moment.   


Small businesses' Apprenticeship fees reduced to 5%

This is big news for small businesses who at the moment are required to pay 10% of their apprentice training costs. This fee has now been halved to 5% with the Government paying the other 95% of the cost.

The change is likely to come into effect at some point in 2019, but a set date has not been issued by the Treasury as yet.

Whenever the change comes into effect, it’s expected only to apply to new starts and it’s not yet clear if this rate of contribution will also apply to levy-paying employers once they have used all their funds.


That’s all the Apprenticeship related news for now. If you want to find out more about the Budget as a whole, have a look at this condensed version.


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