Apprenticeship Levy

The Levy

All UK employers with annual salary bills of more than £3 million now pay an apprenticeship levy.

If you're an employer in Scotland who already has apprenticeship programmes in your organisation, apprenticeship funding will continue to be administered by Skills Development Scotland. This will be done through contracted learning providers and direct employer contracts.

If you do not have any apprenticeship programmes yet, read about our Foundation, Modern and Graduate Apprenticeship programmes. You'll find out how work-based learning can help your organisation's performance and productivity.

Flexible Workforce Development Fund

If you’re an employer paying the Apprenticeship Levy in Scotland, you could apply for up to £15,000 towards the cost of training your workforce.

The Flexible Workforce Development Fund will shortly be available to all Scottish employers. This includes small and medium enterprises.

All employers can access the fund once this Academic Year (September 2022 – July 2023). Employers have the option of using their local college, the Open University in Scotland or a Private Training Provider (administered through Skills Development Scotland). The Fund will be distributed on a first come first served basis.

More information will be available soon but to register your interest, please contact:

For College/Open University funding – fwdf@sfc.co.uk

For Private Training Providers – fwdf@sds.co.uk

Tools and resources

Read more about the Apprenticeship Levy and its background on the Scottish Government website. They have also published a Seven things you need to know about apprenticeships guide featuring the levy. You can also view our levy FAQs below.

For information on paying the levy read HMRC's published guidance.

To understand the difference in apprenticeship policy across the four home nations you can view the SQA’s interactive table

Get in touch

We can help you maximise apprenticeship opportunities for your organisation. For free support contact our employer helpline on 0800 783 6000.

FAQS

What is the Apprenticeship Levy?

The Apprenticeship Levy is a UK Government employment tax that came into effect on 6 April 2017. It is collected across the whole of the UK. All employers (public, private and third sector) with a pay bill of more than £3 million each year will pay the levy.

How will it work?

The levy is set at 0.5% of an employer’s annual wage bill and each employer will receive an allowance of £15,000 per year to offset against the levy. This means that although the levy applies to all employers, only employers with a wage bill over £3 million should pay it.


For example:


Employer A has 250 employees, each with a gross salary of £20,000. They would pay:



  • Pay bill: 250 x £20,000 = £5,000,000

  • Levy sum: 0.5% x £5,000,000 = £25,000

  • Allowance: £25,000 - £15,000 = £10,000 annual levy payment


Employer B has 100 employees, each with a gross salary of £20,000. They would pay:



  • Pay bill: 100 x £20,000 = £2,000,000

  • Levy sum: 0.5% x £2,000,000 = £10,000

  • Allowance: £10,000 - £15,000 = £0 annual levy payment


Employers who operate multiple payrolls will only be able to claim one allowance.


You can use the Skills Funding Agency's indicative online tool for employers to estimate your levy contribution, begin your training requirements, and estimate your financial spending.


You can find further details on the calculation and payment of the apprenticeship levy on Gov.uk.

How will employers pay the apprenticeship levy?

Each month, HM Revenue and Customs (HMRC) will collect the levy through Pay As You Earn (PAYE),  payable alongside income tax and National Insurance. HM Treasury will allocate funding to the Scottish Government through the block grant.


For further details on the calculation and payment of the apprenticeship levy, read HMRC draft legislation.

What will employers get back from the levy?

The Flexible Workforce Development Fund is the Scottish Government's primary response to the UK Government Apprenticeship Levy. This supports skills, training and employment in Scotland. Employers can use the Fund to help employers upskill and reskill their workforce.

Do employers who fund their own apprenticeships still have to pay the levy?

Yes. All employers with a wage bill greater than £3million will pay the levy. Employers could review their skills needs and consider how their current training could be delivered through an approved apprenticeship to maximise their return on the levy.

Will employers who don’t pay the levy still get funding for apprenticeships?

Yes. All employers are still able to access funding for approved apprenticeships. We recognise that apprenticeships are an essential way for SMEs to develop their employees and contribute to growth.

Will Scottish apprenticeships be funded in a similar way to apprenticeships in England?

No. Scotland and England have different administrative arrangements for funding apprenticeships.


In England, funding for apprenticeship training will be administered through a digital apprenticeship system for levy paying employers.


There are no plans to adopt this system in Scotland. Apprenticeship funding will continue to be administered by SDS through contracted learning providers and direct employer contracts.

Will employers who pay a training levy still have to pay this new levy?

Yes, if they have a pay bill greater than £3million, as the apprenticeship levy applies to all employers.


There are two existing industry training boards – the Construction Industry Training Board (CITB) and the Engineering Construction Industry Training Board (ECITB) – which operate their own levies.


Both bodies have consulted with their member companies on how the new apprenticeship levy will interact with training levies. Check directly with them for more information.

What support will be available to help employers understand what these changes mean?

SDS works with employers, including industry bodies, to provide support as administrative arrangements are developed.


We’ll keep updating this page with the latest information for employers on the apprenticeship levy.

How is Skills Development Scotland involved?

Skills Development Scotland (SDS) has established an employer-led Scottish Apprenticeship Advisory Board  (SAAB) to strengthen employer contribution to the development of apprenticeships in Scotland, ensuring they are aligned with industry and economic need, Fair Work and job opportunities.


Both SDS and SAAB continue to engage with the Scottish Government, employers and partners ahead of the levy's introduction.


Our Flexible Workforce Development Fund aims to help employers upskill and reskill their workforce. This is delivered through the Scottish Apprenticeship Advisory Board.

What is the Scottish Apprenticeship Advisory Board?

Led by employers and representatives from industry bodies across a range of sectors, the Scottish Apprenticeship Advisory Board (SAAB) provides employer leadership and contribution to the development of apprenticeships in Scotland; ensuring they are aligned with industry and economic need, Fair Work and job opportunities. The Board consists of four groups – a Group Board, Employer Engagement Group, Employer Equalities Group and Frameworks and Standards Group.


The Board contributes to the Scottish Government’s consultation process on the Apprenticeship Levy. The board will also actively encourage others with a shared interest in apprenticeships to participate.


SDS works with the Board to ensure a demand-led, responsive and adaptive work-based learning system for employers and the Scottish economy.

What's the background to the apprenticeship levy?

The UK Government announced plans for a UK-wide apprenticeship levy on employer payroll bills back in 2015.


The levy is aimed at funding increased uptake of apprenticeships. Legislation was introduced in 2016 and the levy itself was made payable from April 2017 onwards.

How does apprenticeship policy differ across the UK?

To understand the difference in apprenticeship policy across the four home nations you can read the SQA’s Apprenticeships in the UK guide and view their interactive table