Levy FAQ

What is the Apprenticeship Levy?

From 6th April 2017 all employers will have to pay for apprenticeships either through the levy pay bill tax or through a co-investment cash contribution.

The levy is 0.5% of all payroll over £3m, collected monthly by HMRC and available for that company to spend (only) on Government approved programmes.

The levy will be a monthly deduction, so basically these costs will be taken in any month where your pay bill is over £250,000.

What can I spend the levy on?

You can spend your levy funds on Apprenticeship training and assessment with an approved training and assessment provider.

Your levy funds can be used for Apprenticeship programmes called “Standards”, delivered by government approved Apprenticeship training providers.

Each Apprenticeship Standard has a funding cap – you can spend less than the cap with your Levy, but not more.

What can I not spend the levy on?

The Apprenticeship levy funds cannot be used for:

• Wages
• Travel and subsidiary costs
• Traineeships
• Work placement programmes
• Managerial costs
• Statutory licenses to practice
• The costs of setting up an Apprenticeship programme

Did you know…

The government will apply a 10% top-up to the funds you have for spending on apprenticeship training in England. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10.

How is the levy calculated?

Levy payers

Example:

Employer of 250 employees, with an average gross salary of £20,000

Salary bill: 250 x £20,000 = £5,000,000 Levy entry point: = £3,000,000 Therefore Levy payable on £2,000,000 Levy sum: 0.5% x £2,000,000 = £10,000

= £10,000 annual levy payment

+ Top-Up:
 Example:

Employer has £10,000 annually entering their levy account Monthly account funding = £1,000 Top up:

10% x £1,000 = £100 Levy monthly account increase: £1,000 + £100 = £1,100

= £11,100 annually to spend on Apprenticeships

Non-levy payers

Example:

Employer of 100 employees, with an average gross salary of £20,000

Salary bill: 100 x £20,000 = £2,000,000 Levy entry point: = £3,000,000

= £0 annual levy payment