What is Apprenticeship Levy?

Employers in all sectors with an annual pay bill over £3 million will pay a levy of 0.5% of their pay bill – but only after the first £3 million. If an employer’s annual pay bill is £3 million or less then no levy will be charged at all.

For apprentices 16-18 you will receive a £1000 support payment from the government. The levy payments are made monthly to HMRC starting in April 2017 through PAYE. The pay bill is calculated as the total earnings subject to class 1 secondary NICs.

Employers can use their levy contribution to pay for training through approved suppliers such as TheLightBulb. The government will top up your levy payment by a further 5%. The funds are accessed by digital account from the end of May 2017.

Any unused levy contributions will be retained by the government after 24 months. If you don’t use it, you will lose it! For employers under the £3m threshold the government will pay for 95% of your apprentice training costs, meaning you only need to contribute 5%. If you’re an employer with less than 50 staff then better still, the government will pay for 100% of the costs for apprentices aged 16-18.

How TheLightBulb can help you:

If employers do not use the levy to fund apprenticeship training and assessment they will lose it after 24 months. We recommend arranging a consultation with us as an approved supplier to plan for the new arrangements. Employers can use the levy and take advantage of the top-up to train new apprentices or up-skill their existing workforce.

TheLightBulb can assist you to find out how to recover your tax, utilise the levy to invest in your workforce and select the right apprentice scheme for your business. We help and advise employers to select an apprenticeship framework or standard. The government has acted and your funds will be available, we can help you make the most of them. Make sure you use it – don’t lose it.

Key facts about Apprenticeship levy

Does the levy only help big businesses?

  • No, not at all. The levy is there to fund apprenticeship training for all employers. Smaller employers – those with a total annual pay bill of less than £3million – pay just 5% of the cost of their apprenticeship training and the Government pays the rest.


I am a business owner and I am struggling to spend my levy funds?

  • We understand that employers want and need flexibility. To support this the Government extended the amount of time employers have to spend their levy funds from 18 to 24 months. Levy paying employers can now also transfer up to 25% of their Levy funds to other employers.


What happens to unspent levy funds?

  • Employers have 24 months to use their funds once they enter their apprenticeship service account, after this point, their funds will expire. The funds expire to encourage levy paying employers to invest in high-quality training and assessment and to prevent levy payers from accruing very large balances. However, any unspent levy funds within each financial year are then used to support existing apprentices to complete their training, pay for apprenticeship training for smaller employers and additional payments to support apprentices.

I am a business owner; do I need to pay the levy?

  • The levy is paid by large employers with a pay bill of over £3 million (they pay 0.5% of their total annual pay bill). Currently, only 2% of employers pay the apprenticeship levy, but this funding has helped directly support almost 50% of all apprenticeships in 2017/18.


I am a levy-paying business, how can I access my funds?

  • Levy-paying employers access their funds through the online apprenticeship service. The funds in their accounts are available to spend on apprenticeship training in England.


Will my levy funds only be spent on apprenticeships?

  • The levy is there to fund apprenticeship training for all employers. Any unspent levy funds are used to support existing apprentices to complete their training and to pay for apprenticeship training for smaller employers.