Apprenticeships

Apprenticeship Levy

The government has introduced the apprenticeship levy, a compulsory tax on employers to help fund the development and delivery of apprenticeships, with the aim of improving the quality and quantity of those available.

Employers fall into one of two groups: levy payers and non-levy payers. Employers with a pay bill of more than £3 million are required to pay the levy - whether they employ an apprentice or not. Your pay bill includes all payments to employees that are subject to Class 1 secondary National Insurance Contributions, such as wages, bonuses and commission.

Levy-paying employers

Paying the levy

If your pay bill is £3 million or more, you have to pay the levy.

The levy amount payable is calculated at 0.5% of your pay bill. All employers get a £15,000 allowance to offset against the amount they have to pay.

Using your apprenticeship funding

The levy payments will go into the new online Apprenticeship Service, which will enable you to manage your apprenticeship funding and delivery through a virtual account. You'll be able to see how much is in your account and allocate payments to providers of government-approved apprenticeships.

You can work with training providers to agree on an apprenticeship programme suitable for your business. The levy can be used to pay for the End Point Assessments, but not the registration or certification of non-mandatory qualifications.

Non-levy-paying employers

If your pay bill is under £3 million, you do not have to pay the levy.

You can use the online Apprenticeship Service to reserve government funds for apprenticeship training and assessment. You will contribute 5% towards the cost of the required apprenticeship and the government will pay the remaining 95%.

You can work with training providers to agree on an apprenticeship programme suitable for your business. The funding can be used to pay for the End Point Assessments, but not the registration or certification of non-mandatory qualifications.

Not using your full levy fund?

Transfer up to 25% of it and see the benefits for a supporting business

Since April 2019, employers who pay the Apprenticeship levy can transfer a maximum amount of 25% of their annual levy fund to other employers to spend on Apprenticeships. Transferred funds will be used to pay for the training and assessment cost of the Apprenticeships agreed with the receiving employer. Take a look at our Levy Transfer page to find out how to transfer some of your levy fund to another organisation.