Apprenticeship
Levy

The Apprenticeship Levy is a tax on UK employers that is used to fund apprenticeship training. Regardless of sector, all employers with a payroll of over £3 million per annum are required to pay the Apprenticeship Levy. These organisations pay 0.5% of their pay bill to fund the levy.

The Apprenticeship Levy is paid by all employers (including businesses, schools and multi-academy trusts) with an annual wage bill exceeding £3 million.

The Apprenticeship Levy is paid into a central Digital Apprenticeship Service (DAS) account at a rate of 0.5% of the total annual pay bill. Employers manage their levy funds through a DAS account dedicated to apprenticeship training expenditures. Apprenticeship Levy funds must be used within 24 months.

Apprenticeship Levy funds can only be used to pay for training apprentices to achieve qualifications as part of an approved apprenticeship training programme.

Apprenticeship training can only be delivered by an approved training provider. Apprenticeship Levy funds typically cover apprenticeship training costs, assessment costs, training provider fees, administration, certification and qualifications. Apprenticeship Levy funds can be used to upskill existing staff as well as training new apprentices.

The Apprenticeship Levy can only be used by employers in England, as the legislation differs across the devolved nations. This is why levy-funded apprenticeships must work at least 50% of their time within England. The amount of levy available is directly linked to the proportion of employees living in England.

All eligible employers pay the 0.5% Apprenticeship Levy amount at the end of every month. This is collected automatically by HMRC through the employer’s PAYE system.

The Apprenticeship Levy is calculated as 0.5% of an employer’s annual pay bill. However, each employer receives an annual allowance of £15,000 to offset against their levy payment. The amount an employer pays in the levy is their total pay bill multiplied by 0.5%, minus the £15,000 allowance.

Depending on how your school is run, the apprenticeship levy will work differently for different types of schools and multi-academy trusts. Schools and MATs employ lots of different roles, and numerous apprenticeships are available for training or upskilling staff.

What are the latest changes to Apprenticeship Levy funding? In March 2024 the Government announced changes to help support business growth and create opportunities for young people. Major Apprenticeship Levy reforms from 1st April 2024 include:

£60 million new investment to enable up to 20,000 more apprenticeships.

Fully funding training costs for new apprentices aged 16 to 21 hired by SMEs.

Increasing the amount of levy funds that large employers can transfer to support other businesses.

Removal of co-investment costs from non-levy paying employers from April 2024 for apprentices under the age of 22.

An increase in the levy transfer cap from 25% to 50%

The DfE budget for apprenticeships increasing to over £2.7 billion from next year.

In March 2024 the Government announced changes to help support business growth and create opportunities for young people. Major Apprenticeship Levy reforms from 1st April 2024 included: – £60 million new investment to enable up to 20,000 more apprenticeships – Fully funding training costs for new apprentices aged 16 to 21 hired by SMEs – Increasing the amount of levy funds that large employers can transfer to support other businesses – Removal of co-investment costs from non-levy paying employers from April 2024 for apprentices under the age of 22 – An increase in the levy transfer cap from 25% to 50% – The DfE budget for apprenticeships increasing to over £2.7 billion from next year