The Apprenticeship Levy: How it works

What is the Apprenticeship Levy?

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How the Apprenticeship Levy works

The Apprenticeship Levy Process

How Apprenticeships are changing

The Apprenticeship Levy in Scotland, Wales and Northern Ireland

First announced in the Summer Budget 2015, the Apprenticeship Levy aims to support the government’s aim of boosting the UK’s productivity by creating and funding three million Apprenticeship starts by 2020.

The initiative launched in April 2017 and any organisation with a salary bill of more than £3 million per annum, will pay 0.5% of their overall pay bill into the Levy.

How much will your organisation pay? Find out with our Levy Calculator.


Levy payments will be collected via PAYE and will be placed into the Apprenticeship Funding pot by HMRC.

However, organisations can reclaim the money they pay in - and more - by investing in training, whether they’re taking on new staff at the ground floor or are looking to fill room at the top by upskilling existing employees.

If you’ve got any questions about how the Levy will affect your organisation, or are looking for support on developing your talent pool, get in touch for an obligation-free chat with our expert team today:

Talk to our levy team

How does the Apprenticeship Levy work?

Employers with an annual pay bill of over £3 million will need to calculate, report and pay their Levy contribution to HMRC, which will be collected via PAYE.

Levy payers will gain access to the government’s Apprenticeship Service Account, which will enable them to utilise the funds they’ve paid in - plus a 10% top-up contribution from the government - for training and development. There’s also a £15,000 allowance available for each tax year, which can be used to offset Levy payments, which operates on a monthly basis and accumulates over the course of the year.

Using their Apprenticeship Service Account, organisations can also find and appoint approved providers to deliver their Apprenticeship or training programmes. After 24 months, any funds (including top-ups) that are not used will be removed from an employer’s account.

The Apprenticeship Levy Process

Since the process can be quite complex, we’ve illustrated the different roles employers and various government organisations will play throughout in a handy infographic:

See how the Apprenticeship Levy is working for other organisations: 

How are Apprenticeships changing?

Along with funding changes, the Apprenticeship Levy will bring in a raft of alterations in the way apprenticeships are structured and assessed.

The current SASE (Specification of Apprenticeship Standards for England) frameworks are being gradually replaced by a new series of ‘Trailblazer’ apprenticeship standards that are designed to provide better, more relevant training for employers looking to develop their workforce.

These new standards (as well as existing frameworks that have yet to be replaced) will be broken down into 15 funding bands as they are approved, which will range from an upper limit of £1,500 to £27,000. While employers will negotiate prices directly with their training provider, these figures cover the maximum amount the government is prepared to offer for off-the-job training and assessment.

You can see the current list of approved standards and the progress of others here.

The Apprenticeship Levy in Scotland, Wales and Northern Ireland

The Apprenticeship Levy falls under tax laws, which means that it’ll be applied across the UK. However, since training and skills policy is devolved to nations like Wales, Scotland and Northern Ireland - this means the individual countries can decide how to utilise the funds.

Organisations will therefore pay the Levy based on the pay bill of their total workforce, but will only be able to use (and receive a 10% top-up payment from the government on) the funds that apply to their English workforce.

The devolved nations have held their own consultations on how they’ll use the Levy funding they receive, but as of now, there are no concrete plans in place. For more information, take a look at our guide on the issue here.

Next steps

If you’re looking for advice on how best to take advantage of the Levy and recoup your funds, book an obligation-free chat with our team of experts.

We offer a simple, three-step project management service - bearing the brunt of the admin and letting you get on with developing your workforce. And since the government funds us directly, there’s no additional charge: 

Talk to our levy team

What if I don’t meet the threshold for paying the Apprenticeship Levy? 

While employers with a pay bill of less than £3 million per year won’t pay into the Levy, you’ll still be affected by the ways in which Apprenticeships are funded and structured. 

The government is in the process of rolling out new standards to replace the current SASE (Specification of Apprenticeship Standards for England) frameworks. These new ‘Trailblazer’ standards are created by employers, for employers and aim to make Apprenticeships as relevant and beneficial for organisations as possible. 

These are due to completely replace existing frameworks by 2020 and will be allocated to a funding band as they roll out. The government will ‘co-invest’ 90% of the cost of training and assessment, with organisations left to make up the other 10%.

If your organisation won’t be paying the Levy, but you’d still like to take advantage of these low-cost training opportunities, find out how smaller employers can engage with the Levy here.

Book an Apprenticeship Levy consultation

Whether you'll be paying into the Levy or are looking to take advantage of co-investment - simply fill in the form below to book an obligation-free consultation with our expert team today: