The Apprenticeship Levy
The apprenticeship levy is a government initiative to fund apprenticeships.
The government 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.
The Apprenticeship Levy was introduced in April 2017 and applies to employers who have an annual pay bill of over £3 million. Around 2% of employers fall in scope to pay the levy and it’s charged at a rate of 0.5% of an employer’s pay bill. Each employer receives an annual allowance of £15,000 to offset against their levy payment and the levy is collected via the PAYE system on a monthly basis and paid into an online account.
The levy is administered through the Apprenticeship Service (AS) system which includes an online digital interface where employers can spend their levy with a registered apprenticeship provider of their choice. Employers have two years from when funds enter their account to spend those same funds before they expire. The levy can only be spent on the costs of the apprenticeship programme, not on salaries.
If you do not need to pay the Apprenticeship Levy
Smaller employers with an annual pay bill of under £3 million are required to pay a contribution towards the cost of the apprenticeship training programme. Upon enrolment of the apprentice, you will need to pay 5% towards the cost of training of your apprentice. The total cost will vary dependent on the funding band the apprenticeship programme is within. For this you will need to:
The government will pay the rest (95%) up to the funding band maximum. They’ll pay it directly to the training organisation.
There are some exemptions to the 5% contribution:
Meet our dedicated programme design team to: