How much you need to pay
Employers who aren’t connected to another company or charity will have an Apprenticeship Levy allowance of £15,000 each year.
The allowance reduces the amount of Apprenticeship Levy you have to pay by £15,000 across the year. This means that only employers with an annual pay bill of more than £3 million will pay the levy.
You can’t carry over any unused allowance into the next tax year.
Connected companies or charities will only have one £15,000 allowance to share between them.
If you start or stop being an employer part way through the tax year you can use your full annual Apprenticeship Levy allowance against the amount of the levy that you owe.
How to allocate your allowance
Your Apprenticeship Levy allowance of £15,000 can be allocated between:
- all your PAYE schemes
- your connected companies or charities
You can decide how to split the allowance between your PAYE schemes or with your connected companies or charities. You’ll need to report how you’ve allocated your allowance the first time you have to pay Apprenticeship Levy. You can’t change your share of the allowance during the tax year.
You must continue to apply the levy allowance that was allocated at the beginning of the tax year if, part way through the year:
- you become a connected employer (such as by merging with or acquiring another company)
- the structure of your group of connected companies or connected charities changes (such as by demerging with another company)
You can decide how you allocate your levy allowance across your connected companies or charities at the start of the next tax year.
Public bodies each get a full Apprenticeship Levy allowance as they aren’t considered to be connected companies.
NHS trusts and other health service bodies (such as Scottish Health Boards, Welsh Local Health Boards or Irish Health and Social Care Trusts) are considered to be companies and therefore have to follow the connected companies rules.
Public bodies which are charities must follow the rules for connected charities.
Calculate what you owe
Apprenticeship Levy is charged at 0.5% of your annual pay bill.
You can use HMRC’s Basic PAYE Tools to help you work out how much you need to pay.
For the first month of the tax year:
- Divide your Apprenticeship Levy allowance by 12.
- Subtract this figure from 0.5% of your monthly pay bill.
For each of the following months:
- Calculate your total pay bill for the year to date.
- Add up your monthly levy allowances for the year to date.
- Subtract your levy allowance for the year to date from 0.5% of your total pay bill for the year to date.
- Subtract the amount of the levy you’ve paid in the year to date.
If you begin paying the levy part way through the tax year, you’ll need to calculate how much of your annual allowance has been accumulated in the current year. Divide your full annual allowance by 12 and multiply by the number of months since the start of the tax year. This figure is your allowance for the first month you report the levy.
Any unused allowance can be carried forward into the next month within the same tax year.
Industry training levy contributions
You’ll still need to pay Apprenticeship Levy even if you already contribute to an industry-wide training levy arrangement, for example the Construction Industry Training Board Levy.
Contains public sector information licensed under the Open Government Licence v3.0.