Apprenticeship Levy Calculator

The Apprenticeship Levy is a UK tax on employers with an annual payroll of over £3 million. Introduced in April 2017, it is charged at 0.5% of total payroll. Employers receive a £15,000 annual allowance to offset against the levy. The funds collected are placed in a digital apprenticeship service account and can be used to pay for apprenticeship training and assessment.

All UK employers with an annual pay bill exceeding £3 million must pay the Apprenticeship Levy. This is calculated on total employee earnings subject to Class 1 secondary NICs. Connected companies share a single £15,000 allowance. Approximately 2% of UK employers pay the levy, but they employ around 60% of the workforce.

Employers with a payroll under £3 million do not pay the levy. Instead, they access apprenticeship funding through co-investment: the government pays 95% of apprenticeship training costs and the employer pays 5%. Small employers (fewer than 50 staff) hiring 16-18 year old apprentices may pay nothing at all, with the government covering 100% of training costs.

Apprenticeship Levy funds expire 24 months after they enter your digital apprenticeship service account. Funds are used on a first-in, first-out basis. If you do not spend your levy within 24 months, the funds are returned to the government. This makes it important to plan apprenticeship activity to maximise the use of available funds before expiry.

Levy funds can only be spent on apprenticeship training and end-point assessment costs with an approved training provider. They cannot be used for wages, travel expenses, work equipment, uniforms, or any costs not directly related to the apprenticeship training. Employers choose from government-approved apprenticeship standards at funding bands set by the Institute for Apprenticeships.

Yes, since April 2019, levy-paying employers can transfer up to 25% of their annual levy funds to other employers. This is often used to support smaller businesses in your supply chain. Transfers are arranged through the apprenticeship service account. The receiving employer does not need to pay the levy themselves. This is a useful way to avoid fund expiry.

Apprenticeships in England range from Level 2 (Intermediate, equivalent to GCSEs) through Level 3 (Advanced, equivalent to A-levels), Level 4/5 (Higher, equivalent to foundation degree), to Level 6/7 (Degree and Masters level). Training costs increase with level: Level 2 starts around £3,000-5,000, while degree apprenticeships can cost £18,000-27,000 over 3-4 years.

The government adds a 10% top-up to monthly levy funds entering your apprenticeship service account. For example, if your monthly levy contribution after allowance is £10,000, the government adds £1,000, giving you £11,000 to spend on training. This top-up applies only to levy-paying employers and is added automatically each month.

Yes, apprenticeships are not just for new hires. Existing employees can undertake apprenticeships to gain new skills or qualifications, as long as the training provides substantial new learning. This is a popular way for levy payers to upskill their workforce. The apprentice must spend at least 20% of their working hours on off-the-job training (6 hours per week minimum).

Apprentices aged under 19 or in their first year must be paid at least the apprenticeship minimum wage, which is £6.40 per hour in 2025. Apprentices aged 19+ who have completed their first year must be paid at least the National Minimum Wage for their age group. Many employers pay above these minimums to attract and retain quality apprentices.