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 will pay it.
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.