What is the Apprenticeship Levy?

Substantial changes to how apprenticeship programmes in the UK are funded, were introduced in April 2017. Since then, employers with an annual UK payroll bill in excess of £3 million have been required to pay the equivalent of half a percent of the excess into their own dedicated apprenticeship service account. This additional hypothecated tax is known as the Apprenticeship Levy (the Levy).

 

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The Levy at a glance

  • Employers will pay 0.5% of their annual UK payroll bill in excess of £3 million into the Levy
  • Levy payments will be made to HMRC via the monthly PAYE process
  • Levy funds can only be spent on approved apprenticeship programmes such as UCQ’s Chartered Manager Degree Apprenticeship (CMDA)
  • Employers wishing to use their Levy payments to fund apprenticeships will need to set up an apprenticeship service account through Government Gateway
  • Government will top up employer Levy payments by 10%
  • Organisations that have exhausted the funds in their Levy account will receive a minimum of 90% of the cost of any further apprenticeship programmes they wish to undertake from the government
  • Organisations not paying into the Levy will receive a minimum of 90% of the cost of approved apprenticeship programmes from the government
  • Levy funds can be used to upskill existing staff members in areas including leadership and management

     

Guide to Apprenticeship Funding and the Levy

Although all public and private sector organisations based in the UK are classed as being in-scope, currently only those with an annual payroll bill in excess of £3 million pay the Levy. The calculation for how much an organisation’s Levy payments will be, is based upon its total employee earnings subject to class 1 secondary National Insurance contributions. All organisations within England, Wales, Scotland and Northern Ireland whose payroll bill meets the criteria must pay the Levy and there are no exemptions.

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Apprenticeship Levy Calculator

Use our free apprenticeship levy calculator for an indication of what you may be required to pay into the Levy

Calculate your Contributions

Disclaimer: This tool is designed to be illustrative only. The actual amount of levy you will pay may vary, for example, this tool may underestimate the amount of levy you will pay and therefore receive if your organisation is part of a group. UCQ is not responsible for the consequences of any decisions or actions taken in reliance on the information provided by this tool.