What is the Apprenticeship Levy?

The Apprenticeship Levy is a UK government initiative introduced in April 2017 to fund apprenticeship training. It applies to employers with an annual pay bill over £3 million.

When is it due?

The levy is paid monthly through the PAYE system.
Employers must report the amount owed in their Employer Payment Summary (EPS) each month.

How much is it?

The levy is 0.5% of an employer’s annual pay bill.
Employers receive a £15,000 annual allowance, which reduces the amount of levy payable.

For example, if your pay bill is £5 million, the levy is £25,000 (0.5% of £5 million). After the allowance, you pay £10,000.

What counts as the pay bill?

All employee earnings subject to Class 1 secondary National Insurance contributions, including wages, bonuses and commissions.

This includes earnings below the secondary threshold, and for apprentices under 25.

What can your apprenticeship levy funds be used for?

Funds go into a digital Apprenticeship Service account.

These can be used to pay for apprenticeship training and assessment in England.

The government adds a 10% top-up to monthly contributions.
Funds expire after 18 months if not used.

The digital Apprenticeship Service account can only be managed by the employer; unfortunately, agents cannot assist with this.

Additional notes

• Employers in Scotland, Wales and Northern Ireland have separate apprenticeship funding systems.
• Employers with a pay bill under £3 million can still access subsidised apprenticeship training, but do not pay the levy.
• For employers who are connected to another company, the total employer pay bill across all companies is used, and the group only receives one allowance between them.

Need help?

If you’re unsure whether the Apprenticeship Levy applies to your business, or you’d like support managing your levy funds, we’re here to help.

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Dannielle Chapman