Apprenticeship Levy and Apprenticeship Reforms from April 2017

From April 2017 the government is introducing the Apprenticeship Levy. All employers are subject to the apprenticeship levy if their annual pay bill is £3 million or over. This is payable at 0.5% of payroll paid monthly.

These extra funds will be paid into a digital account and you will be able to use them towards taking on and training an apprentice.

What is my wage bill is under £3 million?

From April 2017 employers with a wage bill of under £3 million and over 50 employees will have to make a contribution of only 10% of the cost of training. The government will pay 90%.

From April 2017 non-Levy Small Businesses that employ under 50 members of staff will not have to make any cash contributions.

The levy will be calculated and paid through your PAYE process. Once HMRC receive your payment you will be able to access funding for apprenticeships through a digital account service. Registration for these began in January 2017. From here you will be able search for suitable training providers.

Funds expire in your digital account within 18 months of being paid, so it is in your interest to access and use these to take on apprentices.

Additional information can be found at:


How does the levy work?

The levy is charged at 0.5% of your annual pay bill.

All employers receive an allowance of £15,000

10% top up funds are also being offered therefore for every £1 that comes into your levy account will be increase ton £1.10.


Annual pay bill of £4 million

Levy sum: 0.5% x £4,000,000 = £20,000

Deduct the levy allowance of £15,000

Employers annual levy = £5.000


When employers take on a 16-18 apprentice, they will receive a £1000 to ‘meet the extra costs associated to this’. This will be paid in two instalments to employers via their chosen training provider.

Extra support of £2k will be available to employers and training providers that take on a 16-18 apprentice or young care leavers with an education, health and care (EHC) plan. The employer and provider will receive £1k each.

Levy employers will be able to use funds to retrain workers in new skills, even if they have prior qualifications.

The proposed funding systems will consist of 15 bands, each will have an upper limit ranging from £1500 to £27000.


To find out more please contact Davidson Training on 01375 480088 or email

Download our Levy Guide to get all the information you need with regards to the levy.

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