For information about outages and scheduled maintenance, click here

What is the apprenticeship levy?

Modified on Tue, 10 Dec, 2024 at 2:29 PM

What is the apprenticeship levy?

The Apprenticeship Levy is a UK tax measure introduced in April 2017 to fund apprenticeship programs and to encourage employers to invest in apprenticeship training. The key aspects of the Apprenticeship Levy are as follows:

  1. Levy Rate: The levy is charged at a rate of 0.5% of an employer's total annual pay bill.

  2. Pay Bill Definition: The pay bill includes all payments to employees that are subject to employer Class 1 secondary National Insurance Contributions (NICs), such as wages, bonuses, and commissions.

  3. Levy Allowance: Every employer receives an annual levy allowance of £15,000, which is offset against the levy payment. This means the levy effectively applies to employers with a pay bill over £3 million each year, as the allowance covers the first £15,000 of the levy.

  4. Payment and Reporting: Employers report and pay the levy to HMRC through the Pay As You Earn (PAYE) process alongside tax and National Insurance.

  5. Access to Funds: Funds raised by the levy are accessible to employers in England through a digital service account. These funds can be used to pay for training and assessment of apprentices. The government applies a 10% top-up to the funds.

  6. Expiry of Funds: Funds in the digital account expire 24 months after they enter the account if they are not spent on apprenticeship training.

  7. For Employers in Other UK Regions: While the levy is a UK-wide tax, each of the UK nations manages its own apprenticeship programs. Scotland, Wales, and Northern Ireland have different arrangements for accessing and using levy funds.

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article