What is the Apprenticeship Levy?

The Apprenticeship Levy was a new tax introduced by the Government in April 2017 to fund new apprenticeships. It has provided large organisations with the opportunity to grow their business and up-skill new and existing staff.

How does it affect your business?

It requires employers with a gross annual pay bill of more than £3 million to spend 0.5% on the levy. Each employer receives an allowance of £15,000 to offset against their levy payment.

How you pay the Apprenticeship Levy

You pay the levy monthly through PAYE. It can only be spent on apprenticeship training delivered by approved providers such as City College Norwich.

If you do not spend the money on apprenticeship training it will be an additional monthly cost to your business. It will also be a lost opportunity to grow and develop your workforce.

The levy was introduced to increase the number of apprentices and encourage employers to up-skill existing staff through apprenticeship training.

How to spend your Apprenticeship Levy effectively

Planning for the Apprenticeship Levy isn’t about addressing the short term financial impact, but planning long term strategy and growth. As a levy paying employer this is what our College is doing.

The mix and balance of apprenticeships required to spend the levy effectively needs to be broad. You need to take into account recruitment planning, succession planning, appraisal cycles and the strategic direction of the business.

If you do not spend your Apprenticeship levy you can help other businesses by Sharing to other employers, find out more or contact the Apprenticeship Team.

Apprenticeship Levy calculator and example costs

It is not sustainable to simply spend the levy on Level 2 and 3 Apprenticeships in Customer Service or Business Administration.

When an apprentice is enrolled, the levy fee is spread across the duration of the apprenticeship. 20% is held back to the end as a completion payment. This means, for example, that although a 3.5-year degree level apprenticeship such as a Chartered Manager costs £22,000 it only accounts for £420 per month with a final payment of £4,400.

Some typical apprenticeships, and their funding amounts are shown in the table below. You can estimate your apprenticeship funding by using the Apprenticeship Levy calculator here