JTL Blog

Apprenticeship levy explained


How much will apprenticeships cost me?

The apprenticeship levy affects mainly larger companies with a high payroll bill of more than £3 million. Less than that, the levy does not affect you.

The reality is that less than 2% of UK employers need to pay it and it only affects businesses operating in England. If you have apprentices who started their apprenticeships before 1stMay 2017 you will need to continue funding their training in the same way as you always have. If they started after that date, things have changed.


How much do you have to pay into the levy?

You will need to pay 0.5% of your salary bill into the levy if you have a payroll bill in excess of £3 million a year. If your salary bill is under £3 million but you have more than 50 employees you will have to pay 5% of the apprenticeship cost – broken down over the duration of the apprenticeship delivery. If your salary bill is less than £3 million and you have less than 50 employees you won’t have to pay anything for apprenticeships for 16-18 year olds. If they are 19+ you will have to contribute 5% towards their apprenticeship training. If the apprentice is between 19 and 24 with an Education, Health and Care Plan, this will be fully funded.


How do you pay the apprenticeship levy?

Just as you pay Income Tax and National Insurance contributions, you pay the apprenticeship levy to HMRC through the PAYE system. Any overpayments you make during the year will be returned as a PAYE credit. If you run a limited company and you pay the apprenticeship levy it counts as a deductible expense.

GOV.UK  has set up an online apprenticeship service to help employers manage their apprenticeships and pay the levy amount they owe. Your business can create an account with the service to

–      Receive levy funds for you to spend on apprenticeships

–      Manage your apprentices

–      Pay your training provider

–      Stop or pause payments to your training provider


What can you buy with funds in your apprenticeship account?

You can only use funds in your account to pay for Apprenticeship Training and Assessment for apprentices that work at least 50% of the time in England and only up to the funding band maximum for the apprenticeship the apprentice is on.

If the costs of training and assessment go above the maximum allowed for in the funding band, you will need to pay the difference with other funds from your own budget.

You cannot use the funds in your account to pay for other costs associated with your apprentices – this includes wages, statutory licences to practise, travel and subsidiary costs, work placement programmes or the setting up of your apprenticeship programme within the business.


Information for employers that don’t pay the levy

Non-levy paying employers who take on an apprentice aged 19+ will share the cost of training and assessing their apprentices with the Government – this is called co-investment. Non-levy paying employerswho take on an apprentice aged 16-18 will not have to pay for training, the Government will cover the cost.

For apprentices aged 19+ who started their apprenticeships after 1stApril 2019 you will only have to find 5% towards the cost of apprenticeship training. The Government will pay the other 95% up to the funding band maximum.

There’s lots more information available on our website here or you can call the Apprenticeship employer helpline on 0800 0150 600.

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