Apprenticeship levy and non-levy employers

The Apprenticeship Levy was introduced in 2017 to stipulate the way that apprenticeships are funded.

Levy-paying businesses

Businesses with a wage bill of £3million or above are classed as levy paying businesses and must pay the levy. The levy is paid directly to HMRC through the PAYE process.
The levy is 0.5% of the employer’s wage bill including all earnings that are subject to class 1 National Insurance contributions.
There is a levy allowance of £15,000 per year. So, employers pay 0.5% of their wage bill less £15,000.
In addition, the government applies a 10% top-up to the funds deposited into the employer’s apprenticeship service account. Funds are credited into the Digital Apprenticeship Scheme.
Employers may transfer funds to other employers through the Digital Apprenticeship Scheme. Transfers can be made to any employer, including smaller employers in their supply chain, and apprenticeship training agencies. Levy-paying employers can transfer up to 10% of the annual value of funds entering their apprenticeship service account.

Businesses with a wage bill under £3million are classed as non-levy paying.
Employers are required to pay 5% towards the cost of training, the government will pay the remaining 95%.
Employers with fewer than 50 employees may qualify for fully funded apprenticeships for apprentices aged 16-18 at the start of the programme.

Funding and incentives are frequently available to employers. In particular, those who:

Employ an apprentice aged 16-18 at the start of their course (note that a new apprentice enrolling at age 18 can still be funded).
Employ an apprentice aged under 25 who has an Educational Health Care Plan (EHCP) or is in local authority care.

Last updated: 16th January 2023