Apprenticeship Levy Explained

What is the apprenticeship levy?

Introduced by the government in 2017, the Apprenticeship Levy is a tax paid by employers with a payroll of more than £3 million. This form of taxation is then reinvested into the workforce in the form of apprenticeship training, and so, is designed to help companies offer more apprenticeships.

The levy requires employers meeting the above criteria to make a monthly payment of 0.5% of their payroll. These payments are often held in an electronic account (DAS or Digital Apprenticeship Service) and are available for organisations to spend on accredited apprenticeship training programmes.

Does the apprenticeship levy affect my business?

If your annual payroll is over £3 million per year then your organisation will be required to pay 0.5% of your PAYE (Pay as You Earn) bill. However, all UK-based employers do receive an allowance of £15,000 to help with the levy payment.

For example, if you are an employer with a payroll of £5m per year, your levy charge will be £25,000 (0.5% x £5m). You can then use your £15,000 allowance to help reduce this even further, leaving you with an overall levy payment of £10,000.

Find out exactly how much you’d pay through our handy Apprenticeship Levy calculator.

How is the apprenticeship levy collected and what can it be spent on?

Like with Income Tax and National Insurance, the Apprenticeship Levy will also be collected each month through PAYE.

The levy can be used on existing apprenticeship frameworks or new standards, with an approved training provider, such as Workpays. The levy cannot be used to cover wages or expenses and should only be spent on the cost of training and end-point assessments relevant to the programme.

How can I get involved with the apprenticeship levy?

You can take advantage of the Apprenticeship Levy by retaining and upskilling existing employees, saving you on the costs of recruitment whilst also filling any skill gaps.

Alternatively, you could look into recruiting apprentices for the first time, securing you the best new talent with a drive and passion that will help your business succeed.

How we can help

With our award-winning apprenticeship provision, we can enable your business to realise its goals by developing the skills you need, how you need them, and by when.

Contact us

If you’d like to find out more about our apprenticeship provision for either yourself or your business, please don’t hesitate to contact us using the form below.