Apprenticeship Levy

The Apprenticeship Levy

In April 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.

The apprenticeship levy requires all employers operating in the UK, with a pay bill over £3million each year, to make an investment in apprenticeships which equates to 0.5% of their pay bill. You can benefit from this investment by training apprentices.

Government will ‘top up’ this contribution by 10%, so employers can get out more than they put in to support the training of apprenticeships.

The levy will be deducted via PAYE through an online digital service, where employers can manage their account. Employers will have to be spend their levy in an 18 month period; any unspent funds will be claimed by Government and pooled to support wider apprenticeship provision.

At the same time, major changes are also being made to the delivery of apprenticeships and assessment processes. These include:

  • New apprenticeship standards which promise to significantly expand the range of jobs that can be accessed via an apprenticeship to over 2,000. Many of these new ‘trailblazer’ standards will offer degree-level qualifications from level 4 through to level 7 (postgraduate).
  • A system of end-test assessment, replacing current arrangements whereby assessment is made periodically along a set timescale. Assessment must be completed by an independent organisation.
  • Price ‘minimum’ and ‘maximum’ caps for apprenticeship standards.

The Skills & Growth Company is encouraging employers to plan for the Levy now to ensure they maximise their contributions, aligning them to skills gaps within their businesses, and don’t risk loosing unspent contributions.

Calculating What You Have To Pay

You will pay the levy on your entire pay bill at a rate of 0.5%.

However, you will have a levy allowance to offset against this. The levy allowance is worth £15,000 for each tax year. This means the levy is only payable on pay bills over £3 million (because 0.5% x £3 million = £15,000).

The levy allowance will operate on a monthly basis and will accumulate throughout the year.

This means you will have an allowance of £1,250 per month. Any unused allowance will be carried from one month to the next.

The government will apply a 10% top up to the funds you have available for spending on Apprenticeship training. This will be applied monthly, at the same time as funds enter your Digital Account.


You can also access our Levy Toolkit.


We can help support your business to understand the complexities of the levy, what its implications are for your business and how to effectively plan for April 2017, to maximise the benefits to your business.

Through our team of specialist business and skills advisors, we can support you through the process, ensuring the levy makes a positive impact on your business. We offer a range of services to businesses, including supporting the following key Apprenticeship Levy steps:

  1. Identifying what your organisations training needs are
  2. Specifying the type and level of training required to meet those skills gaps and needs
  3. Determining if the training needs can be met by Apprenticeships
  4. Carrying out a Cost Benefit Analysis linked to your individual Levy contributions
  5. Identifying providers who are best placed to meet your business needs
  6. Promoting the Apprenticeship Scheme – internally and externally
  7. Recruitment and Selection of Apprentices
  8. ‘Gearing Up’ internally to manage and support the programme

These services are open to all business, including those not impacted by the Levy.

If you would like to find out more about any of these services please contact us:

Or call 0300 123 5001

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