student in checked shirt talking to businesspeople

Since April 2017, employers with an annual pay bill of over £3m contribute to the Apprenticeship Levy. The levy is being introduced to improve the quality of apprenticeships, drive an increase in apprenticeship numbers and encourage employers to invest in apprentices.

Employers with an annual pay bill of more than £3m

The levy will be charged at a rate of 0.5% of your yearly pay bill. You will have a levy allowance of £15k per year to offset against the levy you pay and will receive a monthly top-up (10%) from the government which will be added to funds you have for spending on apprenticeship training.

Employers with an annual pay bill of £3m or less

Smaller employers are not required to pay the levy. The government will pay 90% towards the cost of apprenticeships with 10% co-invested by you.

Payment of the levy

You will pay the levy to HM Revenue and Customs (HMRC) through the PAYE process. Once you have paid the levy to HMRC, you'll be able to access funding for apprenticeships through a new digital apprentice service account which you can register for. Levy funds (and top-ups) will expire 24 months after they appear in your digital account unless they are spent on apprenticeship training.

How can the levy funds be used?

You can use the levy funds for tuition and professional apprenticeship standards such as our higher and degree apprenticeship programmes. Every apprenticeship standard and framework will be placed in a funding band, which will define the maximum amount that can be used towards training and assessment costs over the length of each apprenticeship.

When will the levy come into effect?

Funds in your digital account are available, after which you can start spending your levy funds. Funds will appear in your digital account monthly, a few working days after you have confirmed your pay bill and levy contribution to HMRC for the previous month.

Talk to us

There are different ways for the employer to fund the costs of higher and degree apprenticeships, which may include the Apprentice Levy already paid for by the employer or specific funding opportunities which may be available. For a discussion around your specific requirements please contact the team on:

0191 515 3555 /