Skip to content

Toggle service links

Coronavirus: Please be aware it may take us slightly longer to respond than usual. Find out more about our coronavirus response.

You are here

  1. Home
  2. Apprenticeships
  3. Apprenticeship Levy Explained

Apprenticeship Levy Explained

As of 6 April 2017, the introduction of the UK Government’s apprenticeship levy means that any organisations operating in the UK with an annual pay bill of more than £3m will be required to invest in apprenticeships.

The levy will be charged at a rate of 0.5% of your organisation’s annual pay bill. However, the UK Government will provide a ‘levy allowance’ of £15,000 to offset against this, as well as a 10% monthly top-up to the funds employers have for spending on apprenticeship training and assessments in England.

Although the apprenticeship levy will apply to employers across the UK, apprenticeships are a devolved policy. This means that authorities in each of the UK nations manage their own apprenticeship programmes, including how funding is spent on apprenticeship training. More information, including links to the Welsh, Scottish and Northern Irish apprenticeship systems, can be found on the UK Government apprenticeship funding website.

Additional payments to employers in England hiring apprentices

An incentive payment for hiring a new apprentice is different to the apprenticeship levy, and you can spend it on anything to support your organisation’s costs. For example, you could spend it on facilities, uniforms, your apprentice’s travel or their salary. You will not need to pay it back.

The UK Government will extend and increase the incentive payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the UK Government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.

Find out how to apply or watch this video

For more information on taking on apprentices, please get in touch.

Want to know how much your organisation will pay and what funding you'll receive?

Use The Open University apprenticeship levy calculator for an indication of how much funding you will receive from your levy contributions.

Three benefits to acting now:

  1. Leading the way in shaping L&D strategy, you can explore ways to maximise the financial opportunity the levy presents before it is introduced
  2. Beginning to drive high-level skills capability now, you can strengthen business resilience in a challenging economy to give you a competitive edge
  3. Using this time to pilot a smaller cohort of apprentices, you can put new processes in place ready for the levy

Learn even more about the levy and funding in our Apprenticeship levy explained blog post.

And discover how our UK Government-approved degree and higher apprenticeship programmes can be used to develop your workforce.

Find out how we can help your organisation

Please contact us to speak to one of our business team advisors.

Contact us