Your Essential Guide to your Apprenticeship Levy

The Apprenticeship Levy was introduced in April 2017 and is essentially a tax on employers aimed at funding apprenticeship training. This innovative approach is designed to encourage businesses to invest in the training and development of their workforce, thereby enhancing skills across various industries.

What is the Levy?

The Apprenticeship Levy requires all employers with an annual pay bill exceeding £3 million to contribute 0.5% of their payroll costs to the fund. This fund is then used to finance apprenticeship training for both new and existing employees. The goal is to create a sustainable mechanism for employers to invest in the skills necessary for their industry while promoting economic growth through a highly skilled workforce.


Do I Pay the Levy?

If your business has an annual pay bill of £3 million or more, you are obligated to pay the Apprenticeship Levy. The pay bill includes all earnings subject to Class 1 secondary National Insurance contributions, such as wages, bonuses, commissions, and pension contributions. Businesses falling below this threshold are not required to pay the Levy, but they can still access government support for apprenticeship training through a co-investment model.


What is Co-Investment?

Co-investment is an alternative funding mechanism for businesses that do not fall under the Apprenticeship Levy. Employers with an annual pay bill below £3 million can access government support for apprenticeship training by contributing 5% of the total training costs. The government covers the remaining 95%, ensuring that businesses of all sizes can actively participate in apprenticeship programs.

Co-investment provides a flexible and accessible way for smaller businesses to engage in skills development without incurring the full financial burden. It allows employers to tailor apprenticeship training to their specific needs, addressing skill gaps and promoting a culture of continuous learning within the organisation.

In summary, the Apprenticeship Levy serves as a cornerstone for advancing skills and workforce development in the UK. If your business is subject to the Levy, it is essential to understand your obligations and leverage the funds for strategic training initiatives. For those below the threshold, co-investment offers an opportunity to invest in apprenticeships and foster a skilled and resilient workforce for the future. Embracing these initiatives not only benefits individual businesses but contributes to the overall growth and prosperity of the UK economy.


Apprenticeship Levy gifting

Under the Apprenticeship Levy reforms, levy-paying organisations are allowed to transfer 50% of their Levy pot to other organisations that fall under the Co-investment scheme. Since the Apprenticeship Levy was introduced, over £3 billion in expired funds has been given back to the government, therefore many levy-paying organisations are willing to transfer their Levy funds to support a variety of sectors with apprenticeships. At Hawk, we have several employer partners that pay into the Apprenticeship Levy who wish to transfer and support organisations that fall under the Co-investment bracket which we can engage with, on your behalf.