The Apprenticeship Levy
Apprenticeship training is funded by government, employers, and/or the apprenticeship levy.
What is the levy?
The levy was introduced by government in April 2017 as a new way for businesses to invest in their workforces via apprenticeship training.
All businesses in the UK with a pay bill of more than £3 million are required to pay 0.5% of their total pay bill into a digital account, which they can then use to pay for apprenticeship training – this is known as the ‘levy’.
HMRC automatically deducts the levy on a monthly basis.
What does the levy pay for?
You can use your levy – the money deducted from your pay bill and put into your digital account – to pay for apprenticeship training and assessment.
You have 24 months from when the money enters your digital account to use it – after this, it expires.
You cannot currently use your levy to pay for any other training or development costs – it can only be used on training and assessments for apprenticeships.
How can I use the levy?
Your levy allows you to provide apprenticeships to new recruits and your existing workforce where they require up-skilling to do their role.
If you wish to recruit an apprentice into your business, your levy can pay for their training and assessment.
If you want to up-skill, retrain or develop your team, your levy can pay for their training and assessment.
Read more about the benefits of apprenticeships for your business here.
What happens if I spend all of my levy?
To access apprenticeship training beyond the value of your levy, the government will provide funding to help you pay for the extra training required. The government will pay 90%, and you will contribute only 10% of the cost.
How do I pay for apprenticeships if I do not pay the levy?
If you have a pay bill of less than £3 million per year, and therefore are not required to pay the levy, you can still use apprenticeships to develop and train your workforce. For non-levy paying businesses, the government will invest 90% of the costs, and you only pay the remaining 10%.
If you are a small business with less than 50 staff, and employ an apprentice aged 16 to 18, government will pay for 100% of the cost, at no cost to you.
There are additional incentives for employers of apprentices aged 16 to18 and 19 to 24 on a Local Authority Healthcare Plan. Your business may also be eligible for other financial incentives.