FAQs

Apprenticeship Levy Explained

What is the apprenticeship levy?

The apprenticeship levy can be beneficial to businesses, boosting essential skills and training and increasing employee engagement.
First introduced back in 2017, the Apprenticeship Levy is a form of corporate taxation and a requirement for all employers with a payroll threshold of more than £3 million.

The levy funds are made available to help subsidise apprentices training costs.

  • It applies to those with a payroll of more than £3 million
  • It is used to fund apprenticeship training
  • The levy is charged at 0.5% of an employer’s total payroll
  • It is collected monthly through PAYE.

The Specialists Hub Limited is an award-winning apprenticeship, recruitment and training provider with the knowledge and experience to help you take advantage of your apprenticeship levy. Whether you’re a levy-paying employer or a small business exploring your options, we’ll work with you to understand your training needs, apprenticeship funding options and maximise your return on investment.

How is the Apprenticeship Levy calculated?

The Apprenticeship Levy is 0.5% of the employer’s overall payroll, which is offset by the £15,000 government allowance. The levy is distributed on a monthly basis through PAYE alongside income tax and national insurance contributions and appears in the employer’s digital apprenticeship account.

If your company payroll is more than £3 million, you will have already invested in the levy.

What are government apprenticeship grants?

All employers can receive up to a £4,000 employer incentive for apprentices hired between 1 April 2021 and 31 January 2022.  

Employers will receive:

  • £3,000 per new hire, regardless of the apprentice’s age.
  • Additional £1,000 if the apprentice is aged 16 to 18 years old or under 25 with an Education, Health and Care Plan.

Does the Apprenticeship Levy pay for wages?

No, the apprenticeship levy rules state that your levy is only for the training of the apprentice and the Endpoint Assessment, and therefore, is not allocated to pay for apprentice wages.

How do I use an apprenticeship levy?

The apprenticeship levy funds sit in a digital ‘apprenticeship service’ account used by employers to fund apprenticeship training in England, including apprenticeship training and, if applicable, the endpoint assessment. Government-funded apprentices must work at least 50% of their time within England.

This account is not only used to manage levy funding; it can also be used to find training providers or transfer unused funds.

After a period of 24 months, any unused levy funds expire and return to the government. If you are a levy-paying organisation and are not planning on spending your levy, you can pledge it to other businesses.

Who gets the Apprenticeship Levy?

Once an apprenticeships and training provider has been chosen, and a training plan agreed, your training provider will draw the costs out of your digital account every month.

Can the Apprenticeship Levy be used for existing staff?

Yes absolutely! Our team can complete a training needs analysis with you and agree on the best programme to meet the needs of your staff. The cost and duration of the training will also be adjusted accordingly for any prior learning your staff member may already have in the subject.  

How much does the government pay towards the apprenticeship?

If you are a non-levy paying organisation, the government will pay 95% towards the cost of apprenticeship training, and the employer will usually pay the remaining 5%, up to the funding band maximum (this is called co-investment). In many cases, we can secure up to 100% of the training costs using the levy transfer scheme. Our helpful advisors can support you through this process.

How do apprentices get paid?

You must pay apprentices at least the National Minimum Wage. There are different pay rates for apprentices depending on their age and what year of their apprenticeship they’ve completed. The employment contract should make it clear what wage you’ll pay your apprentice and for what hours.

How is an apprenticeship assessed?

All apprentices must take an independent assessment to confirm that they have achieved occupational competence at the end of their training.

Free Apprenticeship Levy Assessment

Get in touch to find out how you can upskill with the Apprenticeship Levy!

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The Specialists Hub is an approved apprenticeships training provider, providing advice on capability, skills, funding and levy to our clients and delivering quality apprenticeship training programmes in Digital, Cyber Security, IT, Risk Business and Data.

Delivered remotely, on-site or at one of our training centres, we provide a unique training service and can tailor or develop any training programme to meet your specific requirements.

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