What is the government top-up on Apprenticeship Levy funds?

The government adds a 10% top-up to the funds that enter your Digital Apprenticeship Service account. For every 1 pound of levy you pay, you receive 1.10 pounds in your DAS account to spend on apprenticeship training. This means an employer paying 10,000 pounds in levy would have 11,000 pounds available in their DAS account. The top-up is applied monthly when funds are added to the account.

Free UK Apprenticeship Levy Calculator

Apprenticeship Levy Calculator

Enter your annual pay bill to calculate your Apprenticeship Levy liability, monthly payments, and Digital Apprenticeship Service balance with government top-up.

Calculate Your Levy

Enter your total annual pay bill (all earnings subject to Class 1 secondary NICs).

Annual Pay Bill

Total wages, salaries, bonuses, commissions, and employer pension contributions.

Apprenticeship Levy Formula:

Levy = (0.5% × Pay Bill) − £15,000

Only employers with a pay bill over £3 million pay the levy.

Your pay bill exceeds the £3M threshold

You are required to pay the Apprenticeship Levy.

Your Levy Breakdown

£2,500

annual levy

Gross Levy (0.5%)

£17,500

Allowance Deduction

−£15,000

Monthly Payment

£208

Gov Top-Up (10%)

+£250

Digital Apprenticeship Service Balance (12 months)

£2,750

£229 available per month for apprenticeship training

Calculation:

0.5% × £3,500,000 = £17,500

£17,500 − £15,000 = £2,500 net levy

£2,500 + 10% top-up = £2,750 DAS balance

Understanding the levy

What is the Apprenticeship Levy?

The Apprenticeship Levy is a UK government tax introduced in April 2017 to fund apprenticeship training across England. It applies to all employers with an annual pay bill exceeding £3 million, regardless of whether they employ apprentices. The levy is charged at 0.5% of the employer’s total pay bill and is collected monthly through PAYE alongside other payroll taxes.

The pay bill includes all employee earnings that are subject to Class 1 secondary National Insurance contributions. This means it covers salaries, wages, bonuses, commissions, overtime payments, and employer pension contributions. It does not include benefits in kind that are not subject to NICs.

Every levy-paying employer receives an annual £15,000 allowance to offset against their levy payments. This effectively means that only the portion of the pay bill above £3 million is subject to the levy. Connected companies and charities share a single allowance between them, which they can split as they choose.

The purpose of the levy is to increase investment in apprenticeship training and give employers more control over the training their apprentices receive. Levy funds are paid into a Digital Apprenticeship Service (DAS) account, where the government adds a 10% top-up to every pound deposited. You can learn more about the levy in the glossary entry for Apprenticeship Levy.

The Apprenticeship Levy Formula

Levy = (0.5% × Pay Bill) − £15,000

0.5% Levy Rate

Applied to total pay bill

£15,000 Allowance

Annual deduction for all employers

+10%

Government Top-Up

Added to your DAS account

Who pays

Who Pays the Apprenticeship Levy?

Any UK employer with an annual pay bill exceeding £3 million must pay the Apprenticeship Levy. According to government estimates, approximately 2% of UK employers are large enough to pay the levy, but these employers account for a significant share of total employment. The levy is not sector-specific — it applies to private businesses, public sector organisations, and charities equally.

For employers operating as part of a group of connected companies, the £3 million threshold applies to the combined pay bill of the entire group. The group shares a single £15,000 annual allowance, which can be divided between group members as they see fit.

Levy Payers

Pay bill over £3M

Pay 0.5% of total pay bill
Receive £15,000 annual allowance
Funds enter DAS account with 10% top-up
100% of apprenticeship costs covered by DAS funds

Non-Levy Payers

Pay bill under £3M

No levy payment required
Government pays 95% of training costs
Employer pays just 5% co-investment
100% funding available for 16-18 year olds (under 50 staff)

Key insight: Even if you do not pay the levy, you can still benefit from apprenticeship funding. The government’s 95% co-investment means a £10,000 apprenticeship costs just £500. Small employers with fewer than 50 staff may get 100% funding for young apprentices.

Using your funds

How to Access Your Levy Funds

Once you pay the Apprenticeship Levy, your funds are deposited into your Digital Apprenticeship Service (DAS) account. You can use these funds to pay for apprenticeship training and end-point assessment for your employees. The process involves registering on the DAS platform, selecting approved training providers, and choosing apprenticeship standards that match your business needs.

It is important to note that levy funds expire after 24 months on a first-in, first-out basis. If you do not use them within this window, unspent funds are returned to the government. Planning your apprenticeship programme early is essential to maximising your return on the levy.

Register on DAS

Create your Digital Apprenticeship Service account at gov.uk to manage your levy funds and apprenticeship agreements.

Choose apprenticeship standards

Select from over 600 approved apprenticeship standards across all levels, from Level 2 (GCSE equivalent) to Level 7 (Master's degree).

Select a training provider

Find an approved training provider who delivers the apprenticeship standard you need. They will train your apprentice and conduct assessments.

Funds drawn automatically

Training costs are drawn from your DAS account monthly. The government top-up is applied automatically when funds are deposited.

Standards & levels

Apprenticeship Standards and Levels

Apprenticeships are no longer just for school leavers. Modern apprenticeship standards range from Level 2 (intermediate) through to Level 7 (equivalent to a Master’s degree), covering technical skills, management, digital, and professional qualifications.

Level	Equivalent	Examples
Level 2	GCSE	Customer Service, Team Member, IT User
Level 3	A-Level	Business Admin, HR Support, Digital Marketer
Level 4	Foundation Degree	HR Consultant, Associate Project Manager
Level 5	Foundation Degree+	HR Consultant/Partner, Operations Manager
Level 6	Bachelor's Degree	Chartered Manager, Digital & Technology Solutions
Level 7	Master's Degree	Senior Leader, MBA, Accountancy/Taxation Professional

The HR apprenticeship pathway is particularly relevant for growing businesses. A Level 3 HR Support apprenticeship costs around £5,000–£7,000, while a Level 5 HR Consultant/Partner apprenticeship costs £9,000–£12,000. These can be fully funded through your levy pot, making them an excellent way to develop in-house HR capability while accessing the learning and development budget you have already paid into.

For non-levy payers using the co-investment route, a £10,000 apprenticeship would cost just £500 (5%), with the government covering the remaining 95%. This makes upskilling through apprenticeships one of the most cost-effective training options available to UK employers.

Common questions

Frequently Asked Questions

What is the Apprenticeship Levy?

The Apprenticeship Levy is a UK tax on employers with an annual pay bill exceeding £3 million. Introduced in April 2017, it is charged at 0.5% of the total pay bill. Employers receive a £15,000 annual allowance to offset against their levy, meaning only the amount above £3 million is effectively taxed. The funds are paid into a Digital Apprenticeship Service (DAS) account and can be used to pay for apprenticeship training and end-point assessment.

Who has to pay the Apprenticeship Levy?

All UK employers with an annual pay bill of more than £3 million must pay the Apprenticeship Levy. The pay bill includes all earnings subject to Class 1 secondary National Insurance contributions, including wages, bonuses, commissions, and pension contributions. Connected companies share a single £15,000 allowance. Employers below the threshold can still access apprenticeship funding through co-investment.

How is the Apprenticeship Levy calculated?

The Apprenticeship Levy is calculated as 0.5% of your total annual pay bill, minus the £15,000 annual allowance. The formula is: Annual Levy = (0.5% × Annual Pay Bill) − £15,000. For example, an employer with a £5 million pay bill would calculate: (0.005 × 5,000,000) − 15,000 = £10,000 annual levy. The levy is paid monthly through PAYE.

What happens to unspent Apprenticeship Levy funds?

Levy funds expire 24 months after they enter your Digital Apprenticeship Service account. Funds operate on a first-in, first-out basis, so the oldest funds are used first. If you do not spend your funds on apprenticeship training within 24 months, they are returned to the government.

What is the government top-up on levy funds?

The government adds a 10% top-up to the funds that enter your Digital Apprenticeship Service account. For every £1 of levy you pay, you receive £1.10 in your DAS account. This means an employer paying £10,000 in levy would have £11,000 available for apprenticeship training.

Can small employers access apprenticeship funding without paying the levy?

Yes, employers who do not pay the levy can fund apprenticeships through co-investment. The government pays 95% of the training costs, and the employer pays just 5%. For example, on a £10,000 apprenticeship, the employer pays only £500. Employers with fewer than 50 employees may receive 100% government funding for apprentices aged 16–18 or 19–24 with an Education, Health and Care plan.

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