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What is the Apprenticeship Levy?

The apprenticeship levy is a payroll tax the government is implementing from April 2017 to help meet its target of delivering three million apprenticeships by 2020.

The levy will be applied to all industries in the UK, replacing all apprenticeship funding currently provided by the government for companies of all sizes.

Employers with a payroll of £3 million and more(approximately 2% of UK employers) will be liable to pay the levy on any payroll above the £3 million bar. Money will be paid automatically through PAYE alongside Income Tax and National Insurance.

Click here to access the Skills Funding Agency’s Levy Calculator

Example

An employer has 500 employers, with a gross company salary of £20,000

Wage bill: 500 x £20,000  = £10 million

£10 million – £3 million levy  = £7 million

0.5% x £7 million = £35,000

Levy total = £35,000

Accessing Money Paid into the Levy

Once companies have paid the levy to HM Revenue and Customs, they will be able to access funding for apprenticeships through the newly introduced Digital Apprenticeship Service. Levy contributions will be able to be used as digital vouchers to pay for training for their apprentices.

The government will apply a 10% top-up to the funds you spend on apprenticeship training in the UK. The top-up will be applied monthly, at the same time the funds enter your account. The aim for this top-up is to incentivise employers who make use of their levy allowance by giving them more back in return.

Levy funds expire 18-24 months after they enter your account, unless this money is spent on apprenticeship training.

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