In short, what is the Apprenticeship Levy?

Gov.uk describe it simply, the Apprenticeship Levy is a levy on UK employers to fund new apprenticeships.

Who does it apply to?

It will be applied to businesses with annual pay bills in excess of £3 million, and the levy will be applied across all sectors.

How much is the levy likely to be?

The levy will be charged at a rate of 0.5% of an employer’s payroll. Each employer will receive an allowance of £15,000 to offset against their levy payment.

How is the levy collected?

It will be collected by the HMRC monthly via Pay As You Earn (PAYE).

Where is this allowance paid into?

After the levy is collected via PAYE, it then becomes accessible by the employer via a digital account service. The employer can then use the account to pay for apprenticeship training.

I am a levy paying employer, how do I access the digital account service?

You can sign-up and access your Apprenticeship Levy Service here.

What can we use the digital account service for?

The digital account allows you 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

What can we use the allowance for?

You can use funds in your digital account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England.

How do we spend our allowance?

Once logged into your digital account you can select the ‘Find apprenticeship training’ to find approved apprenticeship training providers. You will then liaise with your chosen training provider to determine a prices and payment schedules.

Once you agree and the training has started, monthly payments will be taken from your digital account and sent to the training provider.

What if there is not enough money to pay for training one month?

If you don’t have enough funds in your digital account to pay for training in a particular month, you will be asked to share the remaining cost of training and assessing your apprentices for that month with the government. This is called co-investment.

This co-investment means that you will pay 10% of the outstanding balance for that month, and the government will pay the remaining 90% up to the funding band maximum. If your costs go over the maximum, then you must pay the difference out of your own budget.

What are the funding bands?

You can find full details of the funding bands and their maximums here.