Apprenticeship Levy

Our Apprenticeship Levy page is to help you understand all you need to know about the Apprenticeship Levy, how it will affect your business and how to ensure that your employees have the right skill sets to benefit your business.

About the Levy

Are you a levy or non-levy employer? You can get help from the government to pay for apprenticeship training.

The amount you get depends on whether you pay the apprenticeship levy or not. You pay the levy if you’re an employer with a pay bill over £3 million each year.

As a non- levy apprenticeship employer, you pay just 5% towards the cost of training and assessing an apprentice.

The government will pay the rest up to the funding band maximum. You’ll pay the training provider directly and agree on a payment schedule.

If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged:

  • 16 to 18
  • 19 to 24 with an education, health and care plan provided by their local authority or has been in the care of their local authority

If you exceed the funding band maximum, you’ll need to pay all the additional costs.

Find out more about funding an apprenticeship for a non levy employer.

Levy route map - How it works

  • Step 1

    HMRC collects the levy payment monthly through PAYE

  • Step 2

    Funds in Digital Apprenticeship Service (DAS) account. The government top-up your levy pot with a further 10% of funding

  • Step 3

    Member of staff joins apprenticeship programme

  • Step 4

    Apprentices receive their training and assessments

  • Step 5

    Monthly deductions from DAS account

  • Step 6

    Any unused levy funds expire after 24 months

Calculate what you will pay

The levy will only impact your business if you have a pay bill of over £3m, which is based on the total amount of earnings subject to Class 1 secondary employers NIC.

Each employer will have an allowance of £15,000 to offset against their levy payment and the levy will be deducted on a monthly basis, where your pay bill is over £250,000.

Calculate how much your levy payment will be for your business by using our levy calculator.

What is the company's annual wage bill?

Levy Sum: 0.5% x (wage bill) = £

Subtracting levy allowance: £ - £15,000

Annual levy payment: £

Examples of what you might pay

Employer A

Employer A has 250 employees, who each earn £20,000
The employer will have a pay bill of £5,000,000
The government will take 0.5% of £5,000,000 totalling £25,000
The employer receives a £15,000 allowance to offset against the levy
The total annual levy payment would be £10,000

Employer B

Employer B has 100 employees, who each earn £20,000
The employer will have a pay bill of £2,000,000
The government will take 0.5% of £2,000,000 totalling £10,000
The employer receives a £15,000 allowance to offset against the levy
The total annual levy payment would be £0

Frequently Answered Questions (FAQ)

Apprenticeships can be used to upskill your current workforce or to recruit new employees. Apprentices cannot have a qualification above Level 4 (i.e. anyone with a degree or higher) and must have been resident in the EU for the past three years.

Learners must be employed on a full-time basis with a minimum salary of £3.30 per hour, however you are able to offer higher wage packages if you wish.

The levy will begin from April 2017 and will be collected on a monthly basis, based on ‘live’ HMRC payroll data.

There are certain employers who will be required to contribute towards the cost of their apprenticeship training outside of the levy system, such as those whose pay bill is less than £3m per tax year.

If your business fits this criteria, you will be required to co-invest a small proportion of funding towards the cost of apprenticeship training. The government will contribute a large proportion of funding, which will cover a large percentage of the costs of apprenticeships training.

If you are a non-levy-paying employer, you will still need to pay for your apprenticeship training to co-fund it but it will not be collected by HMRC, the proposals are that for every £1 the employer puts in the government matches this with £9.

The vouchers will last for 18 months from the time they appear in your digital account. If they are not spent within this time, they will expire.