Levy Payers


The apprenticeship levy is a payroll tax on UK employers to fund new apprenticeships, which came into play 1st May 2017.

Any UK employer, in any sector, with a salary bill of more than £3 million per tax year will pay the levy.

The levy is set at 0.5% of anything over £3 Million from your salary bill and will be a monthly deduction, so in reality, these costs will be taken in any month where your salary bill is over £250,000.

Earnings in scope for the levy include any remuneration or profit coming from employment of all staff (including directors), such as wages, bonuses, commissions, and pension contributions.

What is an apprenticeship?

There are rules governing what an apprenticeship is.

The main ones are:

  • The apprentice must be employed in a real job; they may be an existing employee or a new hire
  • The apprentice must work towards achieving an approved apprenticeship standard or apprenticeship framework
  • The apprenticeship training must last at least 12 months
  • The apprentice must spend at least 20% of their time on off-the-job training

How is the Levy calculated?


Employer of 250 employees, with an average gross salary of £20,000

Salary bill: 250 x £20,000

= £5,000,000

Levy entry point: = £3,000,000

Therefore Levy payable on £2,000,000

Levy sum: 0.5% x £2,000,000 = £10,000

= £10,000 annual levy payment

+ Top-Up:

Employers who pay the levy and are committed to apprenticeship training will get more out than they pay in to the levy and will be entitled to a 10% top-up to monthly funds from April 2017.


Employer has £10,000 annually entering their levy account

Monthly account funding = £1,000

Top up: 10% x £1,000 = £100

Levy monthly account increase:

£1,000 + £100 = £1,100

How you can use your levy funds?

Funds can only be used for:

  • Apprenticeship training and assessment with an approved training and assessment provider.
  • Apprenticeship standards are not just for entry level positions within your business. Your levy payments can be used to fund education and training for your existing workforce at all levels within your organisation. Staff looking to progress into more senior positions could be eligible for an advanced, higher, degree or Masters-degree equivalent apprenticeship.
  • Should your apprenticeship levy funds run out, you will be required to pay 5% of the training costs

Funds cannot be used for:

  • Wages
  • Statutory licenses to practice
  • Travel and subsidiary costs
  • Managerial costs
  • Traineeships
  • Work placement programmes
  • The costs of setting up an apprenticeship programme

Funds: How is it paid?

  1. Your payroll department will calculate, report and pay your levy to HMRC, through the Pay as You Earn (PAYE) process alongside Income Tax and National Insurance from April 2017
  2. Single employers with multiple PAYE schemes will be added together in levy calculations
  3. Connected employers – the government intends to allow employers to share one allowance between employers who are in connected ownership or control (for example groups of companies or joint ventures)
  4. Your levy payments will be recorded on the Digital Apprenticeship Service website where you can access your account at any time. Baltic will be happy to help you set this up

Funds: Creating your account

The apprenticeship service is an online digital system (similar to online banking) that has been set up to support the apprenticeship levy.

The online service will allow you to financially manage your apprenticeship programmes and help you to estimate your financial spend.

It will also help you:

  • focus on your business priorities
  • address skills shortages head on
  • invest in the skills and training to help your organisations succeed

Funds: When will funds appear in your digital account?

You will be able to see funds appear in your digital account monthly, a few working days after you have confirmed your salary bill and levy contribution to HRMC for the previous month.

This means that the first time you will see any funds in your digital account will be late May 2017.

Funds: Expiry

Levy funds expire 24 months after they enter your account unless you spend them on apprenticeship training. Levy spend will be applied on a first in, first out basis and applies to any top-ups in your digital account.

Funds: 16-18 year olds

You will receive a government incentive of £1000 for recruiting an apprentice aged 16-18

Why choose Baltic?

At Baltic we understand the importance of bringing in new talent and upskilling staff to help fill the skills gap. We want our employers to get the most value for money out of their contribution to apprenticeships, therefore as a Baltic customer we will offer every employer paying into the levy, an additional Microsoft On Demand course.

For more information on the courses available, please speak to a consultant on the live chat, or call us on 01325 731050.

All of our training at Baltic is delivered online, saving you time and cost on travel and accommodation.

View our apprenticeship programmes here.


An Introduction To The Apprenticeship Levy

If you have any questions around the levy, get in touch.

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