Apprenticeship Levy FAQ’s

The Apprenticeship Levy is a payment that is collected from employers in both public and private sectors and is paid to the HMRC via PAYE returns. The purpose of the levy is to encourage employers to invest in Apprenticeship training and improve the quality and quantity of Apprenticeships.

The government introduced the Apprenticeship Levy in May 2017 to help deliver the target of having 3 million Apprenticeships started by 2020 and is designed to make Apprenticeship funding sustainable over the long-term.

Employers with an annual payroll over £3 million and operating in the UK (including private, public and voluntary sector organisations) will have to pay the levy. Employers started paying into the levy in April 2017.

The levy amount is 0.5% of a company’s payroll, and every employer gets an allowance of £15,000 to offset against the amount they owe. In practical terms, this means only employers with a payroll bill of over £3m annually actually pay into the levy.

Please see some practical examples below:

£3,000,000 (payroll) x 0.5% (levy amount) = £15,000 (amount owing pre allowance) – £15,000 (levy allowance) = £0 (levy payable)

£6,000,000 (payroll) x 0.5% (levy amount) = £30,000 (amount owing pre allowance) – £15,000 (levy allowance) = £15,000 (levy payable)

Employers pay into the levy at the same time they make their monthly PAYE payment.

All businesses that pay the levy will be able to access their contribution via their online Digital Apprenticeship Service account. This account can be used to pay for Apprenticeship training and assessment in England.

Employers will start to see funds appear in their digital account a few working days later.

As the money goes into the digital account, it gains a 10% top up from the government. That means for every £1 that enters a business’ digital account it gets an additional 10 pence.

Using the £6m example, if a business pays £15,000 in levy payments throughout the year which is gradually appearing in their digital apprenticeship account, they will also gain an additional £1,500 from government throughout the year too, so they have £16,500 to pay for apprenticeship training and assessment in their digital account.

Funds that businesses accrue in their online digital apprenticeship account will expire 24 months after they appear unless they are spent on apprenticeship training. This is managed online throughout the Digital Apprenticeship Service (DAS).

Whether you pay the levy or not, the arrival of the Digital Apprenticeship Service is relevant as it will be available to help all businesses do the following:

  • select an apprenticeship framework or standard
  • choose the training provider or providers you want to deliver training
  • choose an assessment organisation
  • post apprenticeship vacancies

Unused levy funds will be used by the government to fund Apprenticeship training for small and medium businesses. However, these employers will still pay 10% towards the cost of the Apprenticeship training whilst the government pays the remaining 90%. The training provider (i.e. Cambridge Regional College) will advise the employer on the cost of the Apprenticeship programme.

Employers can spend their levy contributions on Apprenticeship Frameworks or Standards; this includes the training for new apprentices or for staff development within the organisation. Cambridge Regional College offers courses from level 2 right up to level 5 Higher Apprenticeships to help support the development of staff all the way through the business.

If you have any questions about how you can get the very best from the Apprenticeship Levy or if you would like more information on taking on an Apprentice, please contact the Apprenticeship Team on 01223 418778 or email

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