Apprenticeship Levy

A Beginners Guide for Employers

Please use our calculator to see how much levy you would pay based on your estimated wage bill.

What is the company's annual wage bill?

Levy Sum:
0.5% x (wage bill) = £0.00

Subtracting levy allowance:
£0.00 - £15,000

Annual levy payment:

0.00

The Apprenticeship Levy represents a huge change in the way workplace skills and talent development is being addressed in all industries throughout the UK.

Read our quick guide below, however should you require further information, complete the form below and our experts will get in touch for free, no obligation discussion.

An apprenticeship is an actual job which is accompanied by a skills development programme – “Working and Learning”. By following this path the “apprentice” gets experience by being in a workplace but also gains relevant knowledge and skills allowing them to excel in their current job or progress to a more advanced role.

Did you know?
Contrary to popular belief an apprentice is not restricted by age. You can be of any age to become an apprentice!

It is a tax (levy) which employers must pay towards the training of existing or new staff. It is scheduled for launch on 6th April 2017.

Over the years many companies have significantly cut training budgets for staff development, alongside this, students who are leaving our education system are not being sufficiently equipped with real workplace skills. In a post-Brexit world, this will undoubtedly have a long term negative impact on our economy. By introducing this tax the Government is forcing companies to invest in the development of workplace skills.

Additionally, in a fast-moving world of digital technology and automation there are fears that many of today’s jobs will not exist as soon as within the next 10 years. Consequently, it is forecasted that there will be a huge skills gap in newly formed industries and jobs which will need rapid fulfilment. A culture of dynamic knowledge acquisition and skills development therefore needs to be integrated in industry to avoid falling behind.

Did you know?
The levy will raise £3 billion per year for training and development and the government predicts that by 2020 there could be 3 million apprentices enrolling per year!

It depends! If you have an annual wage bill of £3 million or more then you must pay the levy!

If you have a wage bill of less than £3 million annually, then you do not have to pay any levy (at the moment!).

Did you know?
Only around 2% of the businesses have a wage bill which exceeds £3million per year and have to pay the levy but every business in the UK can benefit from the funding available.

Calculating it is quite simple;

The levy is 0.5% of your annual wage bill, but you get the first £15,000 as an allowance.

So, if your wage bill is exactly £3 million, then 0.5% equals £15,000 (your allowance) and therefore you do not pay any tax (levy).

If your wage bill is £5 million, then 0.5% equals £25,000, minus the £15,000 allowance, means your tax (levy) is £10,000.

Please use our calculator to see how much levy you would pay based on your estimated wage bill.

If you are a levy payer (i.e.wage bill of £3m+), then whatever your levy payment is, plus a further 10% contribution by the government can be used to fund apprenticeships (using the above example this is £10,000 + 10%, which means you have £11,000 apprenticeship funding).

If you are a non-levy paying employer (i.e. with a wage bill of less than £3m), then you only pay 10% towards funding apprenticeships and the other 90% is funded by the government. So, if an apprenticeship programme costs £3,000, then you pay £300 and the government will pay £2,700!

Did you know?
If you are a small business owner, you get access to the funding and only need to pay 10% towards an apprentice, the government will pay the rest!

The levy payment is taken at the same time as your monthly PAYE.

Yes! However, it is required that the apprenticeship is relevant to the job role and the apprentice will have the opportunity to develop their career resulting from a successful apprenticeship.

There are many approved training providers across the UK. Most businesses have a wide range of skills that need developing and choosing the right training provider is essential to ensuring you get the most out of the programme.

We offer a FREE service where we offer further guidance and advice on the apprenticeship levy and we will also guide you on the right training providers to fulfil your individual requirements.

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