The Apprenticeship Levy is a UK business levy which is used to fund apprenticeship training by employers with an annual pay bill of more than £3 million. The levy will support quality training by putting employers at the centre of the system. It has been designed to encourage employers to use apprenticeship programmes, either to upskill their existing workforce or to train new staff. It applies to all industries and helps reduce the skills gap within the UK economy.
As per legislation, organisations have to make an investment of 0.5% of their wage bill, paid monthly through Pay As You Earn (PAYE) to HMRC. The government will pay a levy allowance of £15,000 per year to the organisations, to offset against the levy they must pay.
But, any firm with a footprint that includes operations in the devolved nations must subtract this as a percentage of their total apprenticeship pot. Each month they will then get a further 10% top up from the government. Once an employer has paid their monthly levy bill, they will be able to access these funds to pay for apprenticeship training, in the form of digital vouchers, through a new Digital Apprenticeship Service account, which launched in May 2017. The use of the levy for funding apprenticeships is the responsibility of the Department for Education and the Skills Funding Agency in England.