Apprenticeship Levy 

What is the Apprenticeship Levy?

The Apprenticeship Levy was introduced by the Government in April 2017. It is paid at a rate of 0.5% of an employer’s wage bill through Pay As You Earn (PAYE).

Why has the Levy been introduced?

The Apprenticeship Levy has been introduced to help raise £3 billion per year to meet a target of three million new ‘high quality’ Apprenticeships by 2020.

Who has to pay the Apprenticeship Levy?

All companies receive an allowance of £15,000 for the levy, equivalent to 0.5% of a £3 million pay roll. Any company with a paybill over £3 million will be liable to pay the levy.

Example One: Employer of 250 employees, each with a gross salary of £20,000
Paybill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 - £15,000
Annual Levy Payment = £10,000

Example Two: Employer of 100 employees, each with a gross salary of £20,000
Paybill: 100 x £20,000 = £2,000,000
Levy sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 - £15,000
Annual Levy Payment = £0

How will I claim the training from my Levy payments?

Employers in England will be able to reclaim their contributions and choose training providers via a voucher system, through the new Digital Apprenticeship Service.

What are the benefits of the Levy for employers?

- Apprenticeship content will be exactly what you need
- Ensure you are getting value on your investment when working with your training provider
- Access to higher and degree level Apprenticeships
- Ensure that at the end of the Apprenticeship your Apprentice is competent in the role you need them to do .

Transferring Apprenticeship Levy funds to another employer...

Levy-paying employers can transfer funds to other employers through the apprenticeship service. Transfers can be made to any employer, including smaller employers in their supply chain, and apprenticeship training agencies. From April 2024, the amount of funds that levy-paying employers can transfer to other employers to support apprenticeships will increase from 25% to 50%.

Levy payers will have to agree the apprenticeships that are being funded by a transfer with the employer receiving the funds. Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship standards.

If you are in a group of companies paying the levy together, your group can already set up a single shared apprenticeship account and pool your funds. Read more about this here how to register connected organisations.

Further details will follow in the coming months, but you can read more online by clicking here transferring apprenticeship service funds.

If your business is looking at ways to spend the levy pot, then please do not hesitate to contact a member of our team on 01204 677888 or email and we will be more than happy to visit your company to discuss this further.