Paying the Apprenticeship Levy

The Apprenticeship Levy is a UK tax on employers which is used to fund apprenticeship training. The levy is charged at a rate of 0.5% of the employer's 'pay bill'. To exclude smaller employers a £15,000 annual allowance can be claimed. The effect of this limit means that only employers with a pay bill in excess of £3 million are required to contribute to the levy. The £3 million limit also applies to companies who are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million.

Employers who aren’t connected to another company or charity have an Apprenticeship Levy allowance of £15,000 each year. This means the Apprenticeship Levy to be paid is reduced by £15,000 across the year.

The apprenticeship levy allowance of £15,000 can be allocated between:

• all PAYE schemes

• connected companies or charities.

Employers can decide how to split the allowance between PAYE schemes or with connected companies or charities. Employers need to report how they have allocated their allowance the first time they have to pay the apprenticeship levy. There are special rules on how to allocate the apprenticeship levy allowance for employers with multiple PAYE schemes.