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Apprenticeship Levy Payer

Levy Payer frequently asked questions

What is the Apprenticeship levy?

The Apprenticeship levy is a tax that supports the government’s pledge to create three million Apprenticeship starts by 2020.

What counts as my ‘PAYE’?

Your PAYE is based on the total amount of earnings subject to Class 1 secondary NICs (National Insurance Contributions).

How will the levy be collected?

It is collected by Her Majesty’s Revenue and Customs (HMRC), through the PAYE process alongside tax and National Insurance.

Does the levy apply to bonus payments?

Yes, the levy payment is 0.5% of your total gross pay bill.

What are the top-ups?

The government will apply a 10% top-up to the funds you have for spending on Apprenticeship training in England. They will apply the top-up monthly, at the same time the funds enter your Apprenticeship Service Account. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10.

How can I access our Apprenticeship levy funds?

You can access your funds through the Apprenticeship Service Account.

What can I spend my funds on?

Funds in your account and funding provided by the government through co-investment can only be used towards the costs of apprenticeship training and endpoint assessment. This must be with an approved training provider and assessment organisation. It can’t be used on other costs associated with your apprentices or wider training effort. For example wages, statutory licences to practice, travel and subsidiary costs, managerial costs, traineeships, work placement programmes or the costs of setting up an apprenticeship programme.

What if I employ agency workers?

If their recruitment agency pays the employer NI contribution then you will not pay the levy on their pay.

Can existing staff members complete an Apprenticeship?

Yes, providing it is relevant to their role and will allow them to progress.

How long will my vouchers last?

Funds will be valid 18 months from the time they appear in the account, after which, they will expire.

What if I already pay into an existing industry levy scheme?

You will still be required to pay the Apprenticeship levy.

Can I direct my funds to other organisations in my supply chain?

.GOV states: “Levy payers can support apprenticeships in other organisations by transferring a percentage of their apprenticeship funds to other employers. From April 2019 the rate available to transfer increases to 25% of the annual value of funds entering the apprenticeship service account. These funds can be transferred to any employer, including smaller employers in their supply chain, and Apprenticeship Training Agencies (ATAs), to support new opportunities and widen participation in apprenticeships. Levy payers can see their organisation’s annual transfer allowance in their apprenticeship service account.” Click here for more information. 

What if my PAYE varies from month to month?

Some employers may pay the levy in some months but not others, even if their annual PAYE turns out to be less than £3 million.

The PAYE system will ensure that employers pay the correct amount of levy for the tax year. This would involve an in-year repayment by allowing the employer to make a reduction in their other PAYE payments.