On 6 April 2017, the way the government funds apprenticeships in England will change. Some companies will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers. Employers with an annual pay bill of £3 million or over each year will be required to pay 0.5% of their total bill on the apprenticeship levy.
Use our apprenticeship levy calculator to work out how much you’re required to pay:
An employer who would pay the levy
Employer of 250 employees, each with a gross salary of £20,000
Wage bill: 250 x £20,000 – £5,000,000
Levy Sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual Levy Payment
An employer who would not have to pay the levy
Employer of 100 employees, each with a gross salary of £20,000
Wage bill: 100 x £20,000 – £2,000,000
Levy Sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual Levy Payment
Calculate what you will pay
What is the company's annual wage bill?
Levy Sum: 0.5% x (wage bill) = £0.00
Subtracting levy allowance: £0.00 - £15,000
Got questions? We have got the best answers for you.
Apprenticeships already deliver real benefits to business and young people: new reforms aim to boost these even further.
The government is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The levy will help to deliver new apprenticeships, and it will support quality training by putting employers at the centre of the system. Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.
The levy will be charged at a rate of 0.5% of your annual pay bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay.
The levy allowance will operate on a monthly basis and will accumulate throughout the year. This means you will have an allowance of £1,250 a month. Any unused allowance will be carried from one month to the next.
Once you have paid the levy to HM Revenue and Customs (HMRC), you will be able to access funding for apprenticeships through a new digital apprenticeship service account.
You will be able to use this to pay for training and assessment for apprentices in England.
More information on Accessing money paid under the apprenticeship levy can be found on The Government Website.
If you’ve spent all the allowance in your digital account, or your allowance does not cover the cost of your training, you can use the model that applies to non-levy paying employers. You’ll contribute 10% of your training costs, while the government will contribute 90%.
If you’re a small employer and your pay bill is under £3 million each year and want to hire an apprentice aged 16 – 19, you won’t have to contribute towards your apprentice’s training costs.
If you’re a larger employer and your pay bill is under £3 million each year, you’ll contribute 10% towards your apprentice's training costs, while the government will pay the remaining 90%.
You will need to choose the training you’d like your apprentice to receive throughout their apprenticeship. Apprenticeship training can either be on a new apprenticeship standard, or on an existing apprenticeship framework.
If you’re spending funds in your digital account, you must spend it with an approved training provider.
Whether you pay the levy or not, the digital apprenticeship service will help you to:
Profound Group are a government approved training provider, who are included in the register of training providers. We offer high-quality education and training services to employers and have an extensive portfolio of services including apprenticeships.
We’ll work with you to help you understand the levy and develop a plan that aligns your business goals, helping you to analyse and identify skills gaps and recruitment opportunities within your business.
We understand government rules and regulations can be quite daunting, so if you have any questions, please do not hesitate to get in touch.