New apprenticeship levy: how does it affect your business?

While some may see it as a tax, the new apprenticeship levy can be seen as an opportunity for businesses.
5 January 2018

In April 2017, the much awaited Apprenticeship Levy came into effect. The 0.5% Levy must now be paid by all employers with an annual salary bill of more than £3 million.

The charge is, to all intents and purposes a tax on business, yet, the money raised can be used by business to pay for apprenticeship training.

The Apprenticeship Levy

The Levy is quite simple to work out, it has two main factors:

The annual payroll

For any company with an annual payroll over £3,000,000 you will have to pay the Apprenticeship Levy. The levy is calculated at 0.5% of your payroll and funds are held in your apprenticeship training account, which you can draw upon to pay for apprenticeship training.

There is a £15,000 allowance so a company with a £100,000,000 staff salary bill would pay 0.5% less £15,000 (£485,000).

If the company payroll bill is less than £3,000,000 and employs more than 50 people, or the levy apprenticeship training account is empty, the company will be required to make a 10% contribution towards the funding of an apprenticeship (the government will pay the remaining 90%).

The size of the company (staff)

If the company employs less than 50 staff with a payroll bill of less than £3,000,000, apprentices between the ages of 16-18 will be fully funded by the government (apprentices aged 19-23 with an education, care and health plan will also be fully funded). The company will be responsible for the 10% funding contribution for all other 19+ year-old apprentices (the government will pay the remaining 90%).

All employers will receive a £1000 incentive for employing a 16-18 yr. old apprentice, £500 of which is paid after 3 months on programme and £500 on completion of apprenticeship.

So where do you start? YMCA Training have put together a FREE employer toolkit to help you navigate the levy. This includes:

  • A levy calculator
  • A Levy health check with a trained consultant with a view to make your programmes redemptive
  • A business-specific economic forecast, focusing on future skills gaps
  • A branded apprentice recruitment web portal

Organisations such as YMCA Training can help you find quality apprenticeships tailored to your needs and can offer advice about how to make the most of the accompanying government funding that is now available.

If you’d like to discuss how apprenticeships are changing and how your business can benefit please contact YMCA Training at or 01302 813388.