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

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.

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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:

  • agree a payment schedule with the training organisation
  • pay them directly for the training

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:

  1. If you have 50 or fewer employees, the apprenticeship is fully funded by the government if the apprentice is aged 16-18 or the apprentice is 19-24 and has previously been in care or has a Local Authority Education and Health Care Plan. 

  2. Levy-paying employers can utilise their levy pot to pay for your apprentice programme using a levy transfer scheme. In these instances, you will not be required to pay the contributions.


How can we support you and your Levy

Everyone benefits with apprenticeships

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  • Increase employee retention74% of companies surveyed said that apprentices tended to be more loyal, than non-apprentices. 
  • Use funds that will otherwise be lost, only 14% of Levy funds have been used.  
  • Fill any skills gaps and allow the business to source future managers and leaders from within.
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  • Teams are more motivated - 92% of companies who invest in apprentices reported a significant increase in employee motivation. 
  • Enhance team productivity, 76% say that productivity has improved since getting an apprentice. 

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  • Upskill, (92%) of apprentices felt that their apprenticeship had had a positive impact on their career. 
  • An apprenticeship gives staff the opportunity to become more valuable to the company.  
  • Higher morale, teams have higher spirit and morale, as the organisation invested time and training in them. 

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  • 97% of apprentices said their ability to do the job had improved 
  • 92% of apprentices said that their career prospects had improved 
  • Earn while you learn. 

Book a free consultation

Meet our dedicated programme design team to:

  • Discuss the process of building a programme that suits your business needs and represents your business' identity
  • Review your apprenticeship training strategy and development plans
  • The opportunities that apprenticeships can bring to your business
  • Setting up an apprenticeship role and recruiting to your vacancy
  • How staff can undertake training through apprenticeships