Paying the Apprenticeship Levy

This section is relevant for all organisations, UK-wide.

The Levy is being administered by HMRC and will be implemented on a UK-wide basis. It will be payable through Pay As You Earn (PAYE) alongside income tax and National Insurance at a rate of 0.5% of the employer’s paybill (where ‘paybill’ means total employee earnings subject to Class 1 secondary NICs). Apprentice salaries will therefore be included in this calculation and it will apply to overseas salary costs where those employees pay NICs.

Each employer or connected group of employers will also receive one annual allowance of £15,000 to offset against its levy payment. In effect, this will mean that only organisations with an annual paybill of over £3m will be required to make Levy payments. See the examples below:

  • Charity X has a total paybill of £5m
    • Levy sum: 0.5% of £5m = £25,000
    • Allowance: £25,000 – £15,000 = £10,000 annual levy payment
  • Charity Y has a total paybill of £2m
    • Levy sum: 0.5% of £2m = £10,000
    • Allowance: £10,000 – £15,000 = £0 annual levy payment

This annual payment will be made to HMRC on a monthly basis (in the example above: £10,000 over 12 months = £833.33 per month). For organisations working in England, funds (or a proportion of the funds) will be returned to the employer at the end of the next month via their apprenticeship service account. Organisations can register for an account here.

Organisations working in the devolved administrations will not necessarily have access to a digital account. Click here for more information.

To find out if your organisation is a levy payer, and to get an idea of how much you will have available to spend on apprenticeships and how much the government will contribute towards the cost of training, try the Skills Funding Agency’s estimation tool.

To access the Department for Education’s full guidance on paying the Apprenticeship Levy, click here.

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