Levy Guide

Levy Guide

The Apprenticeship Levy is a government initiative which is being introduced as part of the plan to help fund 3 million new Apprenticeships by 2020. As a major commitment to increasing the quality and the volume of Apprenticeships in England a levy is going to be applied to all UK employers, across all sectors.

If your payroll exceeds £3 million per annum your organisation will be required to pay the levy, whilst those whose payroll falls below this threshold will be expected to contribute to training costs. This is currently set at 10% of the cost of Apprenticeship training.

“From April 2017, employers with an annual pay-bill of more than £3 million will pay into the levy”

How will the levy affect your business?

The levy will come into effect in April 2017. From then employers must declare their levy payable on their payroll year to date, with the first payment through HMRC made in May Based on the April payroll.

The levy is 0.5% of an employer’s pay bill.

The levy applies to all employers, but because there is a £15,000 allowance only those with a pay bill above £3 million will pay it


How much will I have to pay?

The levy is 0.5% of an employer’s pay bill. This means that an employer with an annual pay bill of £3 million will incur a levy of £15,000 each year. The allowance means that the actual levy payable is nil as shown below:

Example 1
Pay bill = £3,000,000
0.5% levy = £15,000
Less the £15,000 = £0 levy payable

Example 2
Pay bill = £10,000,000
0.5% – £50,000
Less £15,000 allowance = £35,000 levy actually payable

What can I use the levy for?

Levy funds can only be used to fund approved Apprenticeship training for employees in England. The levy funds will pay for the training costs and for the costs associated with ‘end-point assessment’. Levy funds cannot be used to pay for or contribute to Apprentices’ wages or travel costs and cannot be used to pay for other items of expenditure. Employees who are resident in Scotland or Wales will be subject to different arrangements.

What happens if I spend all my levy funds?

If the training costs of your apprentices exceeds the funds available in your levy account, you will be required to make a 10% contribution towards the remaining delivery costs.

How can I manage my levy?

Employers will be able to view, manage and spend their levy pot through free access to their own account in a new Digital Apprenticeship Service (DAS). The DAS will go live in April 2017 and will enable employers to:

– See levy balances in the account
– See monthly payments and monthly training costs paid
– Calculate how many apprentices can be supported by using their levy
– Find ‘approved’ providers to deliver the Apprenticeships

How can GB Training support me with my levy?

GB Training has many years’ experience of supporting employers and for providing high quality Apprenticeships to new employees and those in your workforce that need to develop new skills and knowledge.

We can support you in understanding and operating the levy process and will provide expert guidance regarding the DAS facilities. We will work alongside you to identify suitable Apprenticeships for your workforce and assist you to profile their enrolments so that the levy is used effectively.

“Government will also provide a 10% top-up to the levy so that employers get back more from the system than they put in.”

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