The Apprenticeship Levy

Facebook Twitter Print Email

The Apprenticeship Levy

The government plans to provide funding for three million new Apprenticeships by 2020. To help fund this growth, some businesses will be expected to pay the Apprenticeship Levy, which aims to raise £3 billion a year.

What is the Apprenticeship Levy?

The Levy is based on employers’ pay bills. It has been set at 0.5% of the annual pay bill over £3 million but there will be exemptions for small businesses and an annual allowance to offset against the Levy payment.

When does the Levy come into effect?

It came into effect in April 2017. Payments will be collected by HMRC from employers who pay the levy in much the same way as tax and National Insurance is collected.

Follow the links below for more information:

Is my business affected?

If your annual pay bill is £3 million or more, then you will be paying the Levy. Currently only your payroll above £3 million is subject to the 0.5% levy which effectively gives you a £15,000 allowance.

If you pay the Levy and employ apprentices you can receive government top-up funds which is currently 10% additional funding paid into your digital account. You will then be able to use your digital account to spend your funds on apprenticeship programmes from John Ruskin College.

If your annual pay bill is below £3 million you will not be required to pay the Levy, but you can still employ apprentices. In this instance the government will pay most of the training costs with the employer contributing 10%. If you employ less than 50 employees and the apprentice is aged 16-18 when they start then the government will pay for all the training.

It is expected that over 98% of businesses will not be required to pay the Levy, but will be able to benefit from the funds raised.

See the examples below of how the Levy works and follow the links below for full details of the Levy and proposed changes to Apprenticeships.

The table below is a brief overview of how the Levy will affect businesses of different sizes. It is for illustrative purposes only. Full details are available via the links and from the John Ruskin College Apprenticeship team.

Your pay bill is over £3m Your pay bill is below £3m, and you have over 50 employees Your pay bill is below £3m, and you have under 50 employees Your pay bill is below £3m, and you have under 50 employees
You need to take action. Contact John Ruskin College for advice Then you are Co-funded for Apprenticeship training (conditions apply) Then you are Fully Funded for Apprenticeship training of 16 to 18 year olds or/and 19 to 24 year old care leavers or 19 to 24 year olds with an education and healthcare plan (conditions apply) Then you are Co-funded for Apprenticeship training of people 19+ (conditions apply)
You will be paying the Levy You will not be paying the Levy You will not be paying the Levy You will not be paying the Levy
The Levy will be 0.5% of your pay bill You will pay 10% of the cost of Apprenticeship training You will not pay for Apprenticeship training You will pay 10% of the cost of Apprenticeship training

If you want to discuss the implications of the Levy on your business then just contact a member of the John Ruskin College Apprenticeship team and we will be delighted to advise you.


Contact us

Contact the John Ruskin College Apprenticeship team if you would like further information and to discuss the Apprenticeship Levy and how it could affect and benefit your business.

Just complete the form below or call the main switchboard:

Telephone: 0208 651 1131 and ask to speak to The Apprenticeship Team, or email the Apprenticeship Team on JRCApprenticeships@johnruskin.ac.uk

  • This field is for validation purposes and should be left unchanged.

How much will the Levy cost?

Here are three examples of cost calculations to help you assess what the cost of the Levy could be to your business:

  • Large Business:

    1,000 employees, each with a gross salary of £25,000
    Annual pay bill: 1,000 x £25,000 = £25,000,000
    Levy applied: 0.5% x £25,000,000 = £125,000
    After allowance applied: £125,000 – £15,000 = £110,000 Levy payment

  • Medium Business:

    500 employees, each with a gross salary of £25,000
    Annual pay bill: 500 x £25,000 = £12,500,000
    Levy applied: 0.5% x £12,500,000 = £62,500
    After allowance applied: £62,500 – £15,000 = £47,500 Levy payment

  • Small Business:

    No Levy applied if the pay roll is below £3 million

Follow the links below for more information:


What else is changing?

At the same time as the changes to funding are being introduced, the current Apprenticeship Frameworks will be replaced by Apprenticeship Standards.

Simply put, the new standards will focus on skills for specific roles as opposed to the old frameworks which have been multi-occupational.

The new standards will be assessed at the end of the apprenticeship by an independent organisation. This will be known as the End Point Assessment, which differs from the current frameworks which encompass ongoing assessment.

There will also be changes in the way that the government’s apprenticeship funding system works. For more information see the links below to information about Standards and to the Skills Funding Agency.

AC National Centre for Diversity - Most Improved Organisation of the year 2019 National Centre for Diversity - Number 4 in the Top 100 Index 2019 Leaders in Diversity National Centre for Diversity Top 100 Matrix The Quality in Careers Standard EU

As part of its funding agreement with the Skills Funding Agency, John Ruskin College vocational courses are part or fully funded by the European Social Fund.