Apprenticeship Levy

The Apprenticeship Levy is on UK employers to fund new apprenticeships. The levy will be charged at a rate of 0.5% of an employer’s pay bill. Each employer will receive an allowance of £15,000 to offset against their levy payment – meaning it won’t be payable by employers with a payroll under £3 million.

This page was first published on 4 February 2016. The last update was on 5 April 2019.

If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017. Read guidance on how to pay the apprenticeship levy.

You will report and pay your levy to HMRC through the PAYE process.

The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.

Register For An Apprenticeship Service Account

If you are a levy-paying employer, you can now create an account on the apprenticeship service to:

  • receive levy funds for you to spend on apprenticeships
  • manage your apprentices
  • pay your training provider
  • stop or pause payments to your training provider

If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least mid-2019, unless you are receiving a transfer of funds from a levy paying employer.

What You Can Buy With Funds In Your Apprenticeship Service Account

You can only use funds in your account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England, and only up to the funding band maximum for that apprenticeship.

If the costs of training and assessment go over the funding band maximum, you will need to pay the difference with other funds from your own budget.

You can’t use funds in your account to pay for other costs associated with your apprentices (such as wages, statutory licences to practise, travel and subsidiary costs, work placement programmes or the setting up of an apprenticeship programme).

The apprenticeship service only supports the English apprenticeship system. The amount of funds in each employer’s account will depend on how many of their employees live in England and the proportion of their pay bill paid to these employees. This is called the ‘English percentage’.

HMRC calculates your ‘English percentage’ from the information you provide about your pay bill, and uses it to put the right proportion of levy funds in your account. Your latest English percentage will be visible in your account.

Non Levy Paying Employers

Non-levy paying employers will share the cost of training and assessing their apprentices with government – this is called ‘co-investment’.

The co-investment rate has changed for new apprenticeships starting on or after 1 April 2019. You will now pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.

All apprenticeships that started before 1 April 2019 will continue at the previous co-investment rate of 10%.

If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least mid-2019, unless you are receiving a transfer of funds from a levy paying employer.

Instead, you’ll need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that you have paid your contributions as a condition of government paying its contribution.

There are 2 different types of apprenticeships to choose from:

  • apprenticeship standards – each standard covers a specific occupation and sets out the core skills, knowledge and behaviours an apprentice will need; they are developed by employer groups known as ‘trailblazers’
  • apprenticeship frameworks – a series of work-related vocational and professional qualifications, with workplace- and classroom-based training

To choose training use the ‘Find apprenticeship training’ service to select an approved apprenticeship training provider.

Apprenticeship Levy

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