Definition
A UK government tax on large employers to fund apprenticeship training. Employers with an annual pay bill of more than 3 million pounds pay 0.5% of their total pay bill, offset by a 15,000 pound annual allowance. The funds are used to pay for apprenticeship training and assessment.
UK Context
Introduced in April 2017, the levy is collected through PAYE. Levy-paying employers access their funds through a digital apprenticeship service account. Funds expire if not used within 24 months. Non-levy employers can still access apprenticeship funding with the government covering 95% of training costs.
Best Practices
- Regularly review your levy account balance and plan training to maximise the use of available funds
- Work with approved training providers to develop apprenticeship programmes that address skills gaps
- Consider transferring up to 25% of unused levy funds to smaller employers in your supply chain
Frequently Asked Questions
Who pays the apprenticeship levy?
Employers with an annual pay bill of more than 3 million pounds pay 0.5% of their total pay bill. They receive a 15,000 pound annual allowance, so the effective levy is 0.5% of pay bill minus 15,000 pounds. Connected companies share one allowance.
What happens to unused levy funds?
Levy funds expire 24 months after they enter the employer's digital apprenticeship service account on a first-in, first-out basis. Employers can transfer up to 25% of their annual funds to other employers, including those in their supply chain.