Apprenticeship Levy

What's the Apprenticeship Levy?

The Apprenticeship Levy is a UK Government employment tax. You may have seen this referred to as the Growth and Skills Levy. It's collected across the whole of the UK.

SDS works with employers, including industry bodies, to provide support.

How do employers benefit from the Apprenticeship Levy?

Levy funds contribute towards the block grant that the Scottish Government receives. The Scottish Government then allocates funding to Skills Development Scotland (SDS) to support apprenticeships.

SDS support Foundation, Modern and Graduate Apprenticeships in Scotland. We make a financial contribution to Modern Apprenticeships by funding delivery through our network of contracted learning providers.

All employers – including levy-paying and non-levy-paying – who have apprentices and premises in Scotland can source apprenticeship training through these learning providers.

We also work with the Scottish Apprenticeship Advisory Board (SAAB) to give employers and industry a leading role in developing apprenticeships in Scotland.

How is the Levy collected and who pays it?

The Levy is collected by HMRC alongside income tax and National Insurance, through Pay As You Earn (PAYE).

All UK employers (public, private and third sector) with a pay bill of more than £3 million each year pay the Levy.

This applies even if you pay another training levy. There are two existing industry training boards which operate their own levies:

• the Construction Industry Training Board (CITB)

• the Engineering Construction Industry Training Board (ECITB)

Check with these bodies for more information about how their levies interact with the Apprenticeship Levy.

How is it calculated?

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

• estimate your financial spending

Find further details on the calculation and payment of the apprenticeship levy on Gov.uk.