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The Apprenticeship Levy

To improve the technical and professional skills of the UK workforce, and to put apprenticeship funding on a sustainable footing, the UK Government introduced the Apprenticeship Levy which requires all UK employers with a wage bill over £3 million a year to invest in apprenticeships.

The Levy will put apprenticeship funding on a sustainable footing and improve the technical and professional skills of the workforce, with a target of 3 million apprenticeships underway by 2020.

Key Facts

  • The Apprenticeship Levy was introduced on 6 April 2017
  • It requires all employers with an annual wage bill of more than £3 million to pay the levy (as a tax) and provides business with an opportunity to invest in apprenticeships
  • The levy will be charged at a rate of 0.5% of a company’s payroll bill and will be collected through PAYE
  • All employers will have an allowance of £15,000 to invest in apprenticeships
  • Businesses in England will be able to directly access their funds through a new Digital Apprenticeships Service
  • The Digital Apprenticeships Service will also allow employers to select training providers and assessors, pay for training, and post vacancies
  • For every £1 an employer in England pays into their digital account, the Government will add a 10% top up
  • Funds in the digital accounts will be available to spend on apprenticeships up to two years after they have been deposited
  • Employers who do not have to pay the levy can receive 90% towards the cost of training an apprentice

Find out more

Please download our Apprenticeship Brochure for more information or have a look through our Degree Apprenticeship FAQs.

  • Further information

    • How much will my company/organisation pay?

      The Levy is 0.5% of employers' total company payroll collected monthly via PAYE. All employers will have an allowance of £15,000, which means that the Levy is applicable on staff payroll over the first £3,000,000.

    • What happens to the money once it is paid under the Levy?

      The money will be collected by HMRC. From May 2017, individual employers’ funding will be made available to them via a new digital account, through which employers will be able to pay for training for apprentices. In England, employers will be able to direct funding towards the apprenticeship training they want through a new Digital Apprenticeship Service (DAS). The Service will also support employers to identify and pay a provider, choose an apprenticeship training course, find a candidate and choose a training provider.

      Employers will be able to pull funding down through the DAS from 1 May 2017. Employers can use funds in their digital account to pay for training from the first month they declare levy payable through the PAYE system. All apprenticeships started before 1 May 2017 will be funded through to completion according to the existing rules.

      Employers will be free to spend their money on apprenticeship training which they judge best meets their needs.

    • What if your payroll is less than £3million?

      Employers with a pay bill of less than £3 million will not have to pay the Levy.

      This group will include around 98% of all employers. These employers will continue to have access to government funding to support apprenticeships.

    • Will Levy paying employers have to put in their own money as well as the Levy to pay for training?

      There are two circumstances where employers are likely to have to contribute additional funds:

      • where the cost of the training they wish to buy is greater than the funding cap for a particular apprenticeship standard or framework
      • where an employer has spent all of their Levy contribution and all of their top-up and wishes to spend more on additional apprenticeship training. This is called co-investment.

      Co-investment rate: For employers who do not pay the Levy, and those who pay the Levy but do not have sufficient funds in their digital account to cover the training and assessment costs in a particular month, the Government proposes that the employer co-invests 10% of the costs, with Government paying the remaining 90%.

      Small employers: The Government proposes to pay 100% of the apprenticeship training costs for small employers (those with fewer than 50 employees) where the apprentice is a 19-24 year old care-leaver or is 19-24 years of age and has a Local Authority Education, Health and Care plan.

      Extra support for apprentices aged 16-18 years of age, 19-24 year old care-leavers and those who have an Education, Health and Care plan: The Government recognises there are additional costs associated with supporting younger apprentices, young care-leavers and young adults with additional learning needs. The Government therefore proposes to make an additional payment of £1,000 to employers and a further £1,000 to training providers to help with these extra costs and ensure all individuals have the opportunity to benefit from an apprenticeship.

      Learning support: The Government proposes to pay training providers up to £150 per month plus additional funds based on evidenced need to support the provision of extra learning support for apprentices with conditions such as dyslexia, learning difficulties or disabilities.

    • What happens to those companies with their own training schemes?

      Apprenticeships are available at all levels and offer valuable transferable skills which are beneficial to both the apprentice and the employer. If you already offer in-house training, we can work with you to look at the best options to maximise your ROI and the impact of the Levy,help you develop your workforce strategy, and explore with you how you could accredit or validate your existing programme.

    • What if an apprenticeship doesn’t exist in my sector?

      If an apprenticeship isn't currently available for your sector we can work together with you and a group of employers to take advantage of the exciting opportunity to develop a bespoke course.

      Transfer of digital funds: From 2018, the Government intends to allow levy-paying employers to transfer up to 10% of the annual funds entering their digital accounts to other employers on the digital system. For example, to help with training and supporting their supply chains.

Get in touch

To learn more about the Apprenticeships Levy and how Middlesex University can help you get the most out of it for your employees and your business please get in touch with our Corporate Engagement team:

Phone: 020 8411 5050
Twitter: @CorporateMU

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