The Government introduced the Apprenticeship levy on the 6th April 2017. It required all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships. The Government have committed to 3 million new Apprenticeships by 2020, spending £2.5bn to transform the country’s investment in skills and people. The Apprenticeship levy will put the funding of Apprenticeships on a sustainable long-term footing. It has long been recognised that apprenticeships boost the skills of the workforce and help to increase economic productivity, providing young people with their first step on the employment ladder as well as giving those already in work the opportunity to progress further, enhancing their skills and knowledge. Levy funds will expire 24 months after they enter your Digital account, unless you spend them on apprenticeship training with a training provider. Whenever a payment is taken from your Digital account, the service automatically uses the funds that entered your account first. This will minimise the amount of expired funds.


Employers who are not connected to another company or charity will have an Apprenticeship Levy allowance of £15,000 each year. The allowance reduces the amount of Apprenticeship Levy you have to pay by £15,000 across the year. This means that only employers with an annual pay bill of more than £3 million will pay the levy at a rate of 0.5% of the annual payroll bill above £3million. You cannot carry over any unused allowance into the next tax year. Connected companies or charities will only have one £15,000 allowance to share between them. If you start or stop being an employer part way through the tax year you can use your full annual Apprenticeship Levy allowance against the amount of the levy that you owe.


You will need to pay the Apprenticeship Levy each month through the PAYE process in the same way you pay Income Tax or National Insurance contributions. If you have overpaid Apprenticeship Levy during the year, you will receive a refund as a PAYE credit. Apprenticeship Levy payments are a deductible expense for Corporation Tax.