The Apprenticeship Levy

What is the apprenticeship levy?

The government is committed to delivering prosperity for the future, and developing our nations skills of tomorrow is absolutely crucial to this plan.

Last year the government announced their vision to improve the quality of apprenticeships in England ensuring they met employers’ requirements for skills and set a target of 3 million apprenticeship starts by 2020. The aim is to ensure that employers take responsibility in creating opportunities for our future generation and addressing the skills shortage.

The system is designed to boost the economy, create and develop a more technically-skilled workforce and ensure that large employers invest in learning and development for their employees. It will enable more people to progress into more senior, technically-challenging job roles.

From the 1st of May 2017, some employers are now required to pay for apprenticeships either through the apprenticeship levy pay bill tax or through a co-investment cash contribution.

Read the full Governments Vision for Apprenticeships by 2020 here.

Existing apprenticeship frameworks will be phased out between now and 2020, and the government is due to announce further employer guidance on how to calculate and pay the apprenticeship levy. Please see our apprenticeship levy news update for further information.

How will the levy affect you?

Category 1

Do you have less than 50 employees and a salary bill of less than £3 million?

  • You won’t make any contribution to the apprenticeship levy
  • All training for 16-18 year olds will be fully funded by the government
  • For apprentices ages 19+ the government will contribute 90% of your training costs, you will contribute the final 10%
  • Funding can be used to upskill employees (including graduates), or to recruit apprentices
  • You will receive a government incentive of £1000 for recruiting an apprentice aged 16-18
  • Any member of staff under the age of 25 who is enrolled on an apprenticeship programme will not be subject to national insurance contributions

Category 2

Do you have more than 50 employees and a salary bill of less than £3 million?

  • The government will contribute 90% of your training costs, you will contribute the final 10%
  • Payment is to be made upfront
  • Funding can be used to train up existing staff (including graduates), or to recruit apprentices of any age
  • You will receive a government incentive of £1000 for recruiting an apprentice aged 16-18
  • Any member of staff under the age of 25 who is enrolled on an apprenticeship programme will not be subject to national insurance contributions

If you fit into this category, please click here.

Category 3

Do you have a salary bill of more than £3 million?

  • You will contribute 0.5% of anything over £3 Million from your salary bill into the apprenticeship levy
  • The 0.5% will be paid through a payroll tax
  • Funding can be used to train up existing staff (including graduates), or to recruit apprentices of any age
  • You can access your funds through an online digital account
  • These funds will expire after 24 months
  • For every £1 that enters your digital account you will get £1.10 to spend through a 10% top-up from the government
  • Any member of staff under the age of 25 who is enrolled on an apprenticeship programme will not be subject to national insurance contributions

For more information on how the levy will be paid and how to claim back your funds, please see our dedicated page for levy payers.

Levy funding can be used to recruit apprentices or to train existing staff. If you are looking to do this for any digital or tech roles, we are able to help!