Apprenticeship Levy

The Apprenticeship Levy is a government initiative which was introduced in 2017 as part of the plan to help fund 3 million new Apprenticeships by 2020. As a major commitment to increasing the quality and the volume of Apprenticeships in England, the levy is applied to all UK employers, across all sectors.
If your payroll exceeds £3 million per annum your organisation is required to pay the levy, whilst those whose payroll falls below this threshold will be expected to contribute to training costs. This is currently set at 5% of the cost of Apprenticeship training.

How will the levy affect your business?

Employers must declare their levy payable on their payroll year to date, with the first payment through HMRC made in May, based on the April payroll.
The levy is 0.5% of an employer’s pay bill.
The levy applies to all employers, but because there is a £15,000 allowance only those with a pay bill above £3 million will pay it

How much will I have to pay?

The levy is 0.5% of an employer’s pay bill. This means that an employer with an annual pay bill of £3 million will incur a levy of £15,000 each year. The allowance means that the actual levy payable is nil as shown below:

Example 1
Pay bill = £3,000,000
0.5% levy = £15,000
Less the £15,000 = £0 levy payable

Example 2
Pay bill = £10,000,000
0.5% – £50,000
Less £15,000 allowance = £35,000 levy actually payable

What can I use the levy for?

Levy funds can only be used to fund approved Apprenticeship training for employees in England. The levy funds will pay for the training costs and for the costs associated with ‘end-point assessment’. Levy funds cannot be used to pay for or contribute to Apprentices’ wages or travel costs and cannot be used to pay for other items of expenditure. Employees who are resident in Scotland or Wales will be subject to different arrangements.

What happens if I spend all my levy funds?

If the training costs of your apprentices exceeds the funds available in your levy account, you will be required to make a 5% contribution towards the remaining delivery costs.

How can I manage my levy?

Employers will be able to view, manage and spend their levy pot through free access to their own account in a new Digital Apprenticeship Service (DAS). The DAS enables employers to:

  • See levy balances in the account
  • See monthly payments and monthly training costs paid
  • Calculate how many apprentices can be supported by using their levy
  • Find ‘approved’ providers to deliver the Apprenticeships

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