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Employers

The Apprenticeship Levy

The Apprenticeship Levy was introduced by the UK Government in 2017, for all employers paying a wage bill of more than £3 million per year. Employers who are in scope are required to pay 0.5% of their payroll each month as a levy tax. The proceeds are ringfenced to be spent specifically on Apprenticeship training with providers such as us here at Smart. Learn more about The Apprenticeship Levy below.

I am a Business Owner; Do I need to pay the Apprenticeship 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). You must report and pay the Apprenticeship Levy monthly through your Employee Payment Summary.

I pay the Apprenticeship Levy – How can I access my funds?

  • Levy paying employers access their funds through the online DAS (Digital Apprenticeship Service) The funds are available to spend on apprenticeship training in England.

Can My Apprenticeship Levy funds only be spent on Apprenticeship training?

  • 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.
  • Levy funding cannot be used for short courses or other non-Apprenticeship training.

I am a smaller employer; does the Apprenticeship 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. In fact, since April 2024, smaller employers no longer need to pay the 5% if the Apprentice is aged 21 or under. The government will cover 100% of the training fee in this case.
  • As a smaller employer – who is not in scope for this tax – you will still need to set up a DAS (Digital Apprenticeship Service) account. Your 5% fee, if applicable, will be payable by invoice to us. VAT is applicable.

How long will I be given to spend my Apprenticeship Levy funding?

  • The government allow employers 24 months to spend their levy funds. Levy paying employers can now also transfer up to 50% of their Levy funds to other employers.

Our guide to Apprenticeship Levy Transfers
GOV UK Information

I am a levy paying business, will the Government spend my unspent Apprenticeship Levy funds on other things?

  • Employers can only spend their levy funds on Apprenticeship training in England.
  • However, it is important to note that there is a difference between employers’ levy funds and the department’s ring-fenced Apprenticeship budget. The departments’ budget funds all Apprentices currently in training – those already in an Apprenticeship and those just starting, those working for employers who pay the Apprenticeship levy, and those working for employers who do not.
  • 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.
  • Don’t lose your funding back to the treasury – talk to Smart today about all things Apprenticeships – whether this be to facilitate new team members within your business or to upskill your existing staff.

I am interested in Apprenticeships, but I find the Apprenticeship Levy system bureaucratic and complicated. Who can I talk to for help?

  • Talk to us at Smart! We have a dedicated helpdesk who can support you with getting set up with a DAS (Digital Apprenticeship Service) account. We will guide you along this process, step-by-step. Once set up, we will complete all of the administration for you, you will simply need to just “approve” or “stop” new Apprentices who are enrolling with us.
Contact Smart about the Apprenticeship Levy

 

 

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