levyThe Apprenticeship Levy

From April 2017, the government is changing the way Apprenticeships are funded by introducing a new scheme known as the Apprenticeship Levy.

The Workpays team are happy to advise employers about the implications. Here’s a quick summary to help you to understand the key points:

  • The Apprenticeship Levy requires all employers operating in the UK, with a payroll exceeding £3 million each year, to make an investment in Apprenticeships. This is calculated at 0.5% of their annual payroll.
  • Public sector organisations are also required to pay the Apprenticeship Levy if their payroll meets the same criteria. Also, a total of 2.32% of their workforce must be Apprentices.
  • The government has set a target of three million Apprenticeships by 2020 and the purpose of the Levy is to improve the quality and quantity of Apprenticeships in England to meet this target.
  • A further objective of the Levy is to provide a sustainable workforce and bridge the skills gap affecting many industries including tech.

Will my business have to pay the Apprenticeship Levy?

The levy is calculated at 0.5% from an employer’s payroll bill. However, as employers receive a £15,000 offset allowance every tax year, it is likely that a most companies will not need to pay anything at all. Look at these examples.

  • A business with a payroll of £3 million would pay nil, this is because 0.5% x £3 million = £15,000.
  • An organisation with a turnover of £5 million would need to pay £10,000 annually. This is calculated by taking 0.5% of £5 million = £25,000 minus the Levy allowance of £15,000.


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