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 over £3 million will be liable to pay the levy on any payroll above £3 million. Furthermore, 2.32% of the workforce in public sector organisations must be apprentices.


The government has announced a ‘levy allowance’ of £15,000 per year. This means that the total amount companies will need to spend is 0.5% of your pay bill, minus £15,000. Money will be paid automatically through PAYE alongside Income Tax and National Insurance.

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



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

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

0.5% x £10 million = £50,000

£50,000 – £15,000 government allowance

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 online apprenticeship service*. The Levy contributions will be able to be used as digital vouchers to pay for training for their apprentices.

*The apprenticeship service is now open for registration for employers – click here to get started.

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 (and top-ups) will expire 24 months after they enter your account, unless this money is spent on apprenticeship training.

Training and help will still be available to businesses, so when used, companies can still access highly-subsidised training even when they have spent their contribution to the Apprenticeship Levy

Apprenticeship Reforms

New apprenticeship reforms due to be implemented from spring 2017 will transform the current structure of apprenticeships, looking to meet the changing requirements for employers, learners and providers.

The new standards will look to:

  • Give employers control in designing apprenticeships
  • Increase the flexibility of delivery
  • Simplify the funding system
  • Increase the effectiveness of training

Over 1,000 employers have been involved in developing the standards in over 100 sectors. The standards will describe the skills, knowledge and behaviours that an individual needs in an occupation. They will generally be only two pages long, allowing ease for readers to digest. According to Gov.UK the standards will ‘act as a ‘shop window’ for the apprenticeship, providing a specification of what the apprentice needs to be able to demonstrate at the end of their apprenticeship to show that they are a fully competent professional’.


We offer support and consultation advice for an employer in regards to the new apprenticeship levy. Any questions, please get in touch with the Business Development department on 01634298808


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