Apprenticeship Levy FAQs

What is the Apprenticeship Levy?

The Levy started on the 6th April 2017 to create more funds for Apprenticeships. Whether or not your organisation pays into an Apprenticeship Levy account depends entirely on its annual payroll. Simply if the payroll is above £3 million, then there is 0.5% “Levy” on the payroll above this amount.

What can I spend our Levy funds on?

Your Apprenticeship Levy funds can only be used to for apprenticeships that are approved for delivery by the Education and Skills Funding Agency (ESFA). NowSkills offers only approved apprenticeship programmes that your Levy funds can be used to fund.

What can we not spend our Levy funds on?

The ESFA funding rules for apprenticeship are clear and your levy funds are specifically designed to fund for new skills for apprentices. Although many may consider additional costs besides training part of the Apprenticeship, there are a selection of things in which the funds cannot be spent on. These include but are not limited to:

  • Wages
  • Travel and subsidiary costs
  • TraineeshipsWork placement programmes
  • Administration of your internal apprenticeship programme
  • Statutory licenses to practice
  • The costs of setting up an Apprenticeship programme

For the latest rules on funding or if you have questions, please contact us

How is our Levy payment calculated?

Example 1:

  • Annual Payroll: £5,000,000
  • No Levy payable on the first £3,000,000
  • 0.5% Levy is payable on £2,000,000 = £10,000
  • PLUS 10% Government Top-Up = £1,000
  • The amount available to spend on apprenticeships = £11,000

Example 2:

  • Annual Payroll: £12,500,000
  • No Levy payable on the first £3,000,000
  • 0.5% Levy is payable on £9,500,000 = £47,500
  • PLUS 10% Government Top-Up = £4,750
  • The amount available to spend on apprenticeships = £52,250

What happens if we don’t spend all of our Levy funds?

Employers do not have to spend the funds, but the oldest monthly payment in your account will expire and be claimed by HM Treasury when it is 24 months old.  When you log into your Digital Account, you will see the monthly amounts paid in and available to spend, the oldest monies will be used first when you enrol new apprentices onto official programmes.

What if we use all our Levy funds?

If you spend all of your Apprenticeship Levy funds, you will then be moved into the co-investment band and you will be required to contribute 5% towards the cost of the programme, for this amount, NowSkills will raise a monthly invoice. The remaining 95% will be co-funded by the government.