LEVY PAYER

LEVY PAYERS

HOW THE APPRENTICESHIP LEVY WORKS?

There are two types of companies in England. The two categories in which the companies could be categorised are levy-payers (who pay the levy apprenticeship) and non-levy payers (who do not pay the tax).

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WHAT IS THE APPRENTICESHIPS LEVY?

The main goal of the levy is to incentive the employers to invest in apprenticeship programs to upskill they already exist staff or to train new apprentices and to boost additional funds to reach a high-quality level in both quality and quantity of apprenticeships.
The Apprenticeship Levy is a payment that is collected from large employers or SME’s in both the public and the private sectors. The payment is collected by the HMRC.
The Apprenticeship Levy paid by businesses can be accessed by those same businesses to fund apprenticeship training for themselves.

WHAT SIZE OF BUSINESS IS SUBJECT TO THE LEVY?

The levy threshold is calculated by size of payroll. Businesses with a wage bill of more than £3 million will be required to pay the levy but if your business have a wage bill under the £3,000,000.00 you will not pay the levy and you will be a non-payer Levy.

LEVY PAYER

If your company based in Uk has a wage bill above 3£ million per year you are a levy payer and you need to pay every month 0.5% of your payroll into the apprenticeship levy.
Your levy is collected through the PAYE system by the HMRC. With the funds set aside in your business’ apprenticeship service account, you can pay for apprenticeship training and assessment costs for upskilling your existing staff’s members or to take some new apprentices.

NON LEVY PAYER

If your company’s wage bills are below 3£ million per year then you are a non-levy payer and you will not pay the levy apprenticeships. Non-levy paying employers can still benefit from the levy apprenticeship by sending their staff on an apprenticeship and share the cost of training and assessing their apprentices with the Government – this is called ‘co-investment’. More precisely your company will pay 10% of the cost of apprenticeship training and the Government will pay the other 90%, up to the funding band maximum.

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The Apprenticeship Levy is set at 0.5% of your total payroll and is collected monthly via PAYE. There is a £15,000 fixed annual allowance that employers can offset against their levy payments.
The levy allowance operates on a monthly basis and accumulates over the year. This means you have an allowance of £1,250 a month. Any unused allowance is carried over from one month to the next.

EXAMPLE: Calculating what you have to pay

An employer with an annual wage bill of £6m

Levy sum: 0.5% of £6,000,000 = £30,000

Offset allowance of £15,000 (£30,000-£15,000) = £15,000

Annual levy payment = £15,000 (£1250 per month)

Yes. Levy funds will expire 24 months after they enter your digital account unless you spend them on Apprenticeship training.
For example, funds that entered your account in September 2020 will expire in September 2022.
If you don’t use them, you will lose them.

If an employer pays the Apprenticeship Levy but their funds don’t cover the full cost of the Apprenticeship training they would like to buy, then additional support is available.
The government will pay 95% of the additional costs (up to the maximum of the relevant funding band) - with you as the employer ‘co-investing’ 5%.

Employers that pay the levy in England receive a 10% top-up from government. It means that for every £1 you contribute, you actually receive £1.10.

Apprenticeships can be offered to your new or current staff of all ages and at any level. Older staff, can follow an Apprenticeship if they are taking on new roles or require new knowledge and skills.

As an additional incentive during the COVID-19 pandemic, employers are given £2,000 for each new apprentice aged 16-24 who starts their contract of employment between 1 August 2020 and 31 January 2021, or £1,500 for each new apprentice aged 25+.
Employers are also given an extra £1,000 for taking on an Apprentice aged 16-18. The money is paid in two stages – at three and 12 months.
If you employ an Apprentice who needs extra help with English and maths, additional payments are made to your training provider. This does not come out of your Apprenticeship Levy funds.