Apprenticeship Levy Calculator
Calculate your monthly and annual Apprenticeship Levy obligations
What is the Apprenticeship Levy?
The Apprenticeship Levy is a tax on employers to fund apprenticeship training. It was introduced in April 2017 to increase the quantity and quality of apprenticeships.
Key Facts:
- Rate: 0.5% of annual pay bill
- Threshold: Only applies if annual pay bill exceeds £3 million
- Allowance: All employers receive £15,000 annual allowance to offset levy
- Collection: Collected monthly through PAYE alongside other payroll taxes
Who Pays the Levy?
Only employers with an annual pay bill over £3 million pay the levy. This represents approximately 2% of employers. Smaller employers don't pay the levy but can still access government funding for apprenticeships.
How the Levy is Calculated
1. Calculate Gross Levy
Annual pay bill × 0.5% (0.005)
Example: £5,000,000 × 0.005 = £25,000 gross levy
2. Deduct Annual Allowance
Gross levy - £15,000 allowance
Example: £25,000 - £15,000 = £10,000 net annual levy
3. Calculate Monthly Payment
Net annual levy ÷ 12 months
Example: £10,000 ÷ 12 = £833.33 per month
What is "Pay Bill"?
Your pay bill is the total amount of earnings subject to Class 1 secondary National Insurance Contributions. This includes wages, bonuses, commissions, and some benefits in kind.
Connected Companies and Charities
If your organisation is connected to other companies or charities, special rules apply for calculating the levy and sharing the £15,000 allowance.
When Companies are "Connected":
- • One company has control over another
- • Both companies are controlled by the same person or group
- • Companies are part of the same group structure
How the Allowance is Shared:
The £15,000 allowance must be shared equally between all connected employers, unless you choose to allocate it differently.
Example:
3 connected companies = £15,000 ÷ 3 = £5,000 allowance each
Or you can allocate differently (e.g., £10,000, £5,000, £0)
Why Use the Levy Calculator?
Check if Levy Applies
Instantly determine if your pay bill exceeds the £3 million threshold
Calculate Exact Liability
Get precise annual and monthly levy amounts for payroll planning
Handle Connected Companies
Calculate allowance sharing for connected employers and charities
Monthly Breakdown
View month-by-month levy accumulation and PAYE deductions throughout the tax year
How to Use the Calculator
1Enter Your Annual Pay Bill
Enter your total annual pay bill - the sum of all earnings subject to Class 1 secondary NICs across your organisation.
Includes:
- • Salaries and wages
- • Bonuses and commissions
- • Some benefits in kind
- • Any earnings subject to Class 1 secondary NICs
2Indicate Connected Companies (if applicable)
If your organisation is connected to other companies or charities, check the "Connected to other companies/charities" box.
3Enter Connection Details
If connected, enter:
- • Number of connected employers: Total count including your organisation
- • Allocated allowance: Your share of the £15,000 (defaults to equal split)
4Review Results
The calculator shows:
- • Whether the levy applies to you
- • Gross levy before allowance
- • Net annual levy after allowance
- • Monthly PAYE deduction amount
- • Month-by-month breakdown for the tax year
Your Digital Apprenticeship Account
Levy-paying employers can access their funds through the Apprenticeship Service digital account:
- •Levy funds are credited to your account monthly
- •Government adds a 10% top-up to your levy funds
- •Funds expire after 24 months if not used
- •Use funds to pay for apprenticeship training and assessment
- •Can transfer up to 50% of funds to other employers
Important Points About the Levy
- •Tax year basis: Levy calculations run April to March (tax year), not calendar year
- •PAYE collection: Levy is reported and paid monthly through your PAYE submissions
- •Allowance is annual: The £15,000 allowance applies per tax year, not per month
- •All sectors: The levy applies to all sectors - private, public, and charitable organisations
- •Cannot be avoided: Unlike voluntary apprenticeship training, the levy is mandatory for eligible employers
- •Use it or lose it: Unused levy funds expire after 24 months
What if I Don't Pay the Levy?
If your annual pay bill is under £3 million, you don't pay the levy but can still access government funding for apprenticeships:
Government Co-Investment
The government pays 95% of training costs for apprentices. Employers with fewer than 50 employees receive 100% funding for 16-18 year olds.
Employer Contribution
Non-levy employers typically pay 5% of the training costs (called co-investment). Small employers may receive additional support.
The Levy Calculator Interface
The calculator provides a clear interface to enter your annual pay bill, indicate if you have connected companies, and view your levy liability with monthly breakdowns.
Tips for Managing the Levy
- •Plan ahead: Calculate your annual levy early to budget appropriately for payroll costs
- •Use your funds: Don't let levy funds expire - plan apprenticeship recruitment to maximize usage
- •Consider transfers: Transfer unused funds to supply chain partners or other employers
- •Monitor pay bill: Track your pay bill quarterly to predict when you'll cross the £3 million threshold
- •Connected company rules: Seek specialist advice if you have a complex group structure
- •Register early: Set up your Apprenticeship Service account as soon as you become liable
- •Claim the top-up: Remember the 10% government top-up increases your available funds
Ready to Calculate?
Use the Apprenticeship Levy Calculator to determine your levy liability and plan your payroll.
Open Calculator