UK Apprenticeship Levy (2026/27)
UK Apprenticeship Levy 2026/27: 0.5% of pay bill less a £15,000 allowance, so payable once the annual pay bill is over £3 million. How it is worked out.
The Apprenticeship Levy is a 0.5% charge on UK employers' annual pay bill, less a £15,000 Levy Allowance, so it is only payable once the annual pay bill is over £3,000,000 (HMRC). The pay bill is every payment subject to employer Class 1 National Insurance, including pay below the NI thresholds. Employers in England can spend the funds that reach their apprenticeship service account on approved apprenticeship training and assessment.
Levy due by pay bill
Annual figures for a single employer that is not connected to another company or charity:
| Annual pay bill | Levy gross (0.5%) | Levy allowance | Net levy due |
|---|---|---|---|
| £2,500,000 | £12,500 | £15,000 | £0 |
| £3,000,000 | £15,000 | £15,000 | £0 |
| £4,000,000 | £20,000 | £15,000 | £5,000 |
| £5,000,000 | £25,000 | £15,000 | £10,000 |
| £10,000,000 | £50,000 | £15,000 | £35,000 |
| £50,000,000 | £250,000 | £15,000 | £235,000 |
Related
Frequently asked questions
What is the UK Apprenticeship Levy?
A UK-wide tax on employers, charged since 6 April 2017 under Part 6 of the Finance Act 2016. It is 0.5% of the annual pay bill, less a £15,000 Levy Allowance, so it is only payable once the pay bill is over £3,000,000. Employers in England can use the funds that enter their apprenticeship service account to pay for apprenticeship training and assessment.
Who pays the Apprenticeship Levy?
Employers whose annual pay bill is more than £3,000,000, counting connected companies or charities together. The pay bill is all earnings subject to employer Class 1 National Insurance, such as wages, bonuses and commissions, including pay below the secondary threshold and lower earnings limit and pay to under-21s and apprentices under 25. Benefits in kind subject to Class 1A are excluded. The levy is reported and paid monthly through the Employer Payment Summary.
How does the £15,000 allowance work?
It builds up at £1,250 a month and the calculation is cumulative over the tax year: 0.5% of the pay bill to date, less the allowance to date, less levy already paid. At a pay bill of exactly £3,000,000 a year (£250,000 a month) the levy and the allowance cancel out. Unused allowance cannot be carried into the next tax year. Connected companies or charities share one £15,000 allowance and choose how to split it.
How can the levy be used?
Funds enter the apprenticeship service account in proportion to the share of the pay bill paid to employees living in England, and pay for approved apprenticeship training and assessment in England. A levy-paying employer can transfer up to 50% of its previous year's levy funds to other businesses (raised from 25% on 22 April 2024). Scotland, Wales and Northern Ireland fund apprenticeships through their own schemes.
What about employers below the £3m threshold?
They do not pay the levy but can still get funding in England. For apprenticeships starting on or after 1 August 2026, the government pays the full training and assessment cost up to the funding band maximum for apprentices aged 16 to 24, and 95% for apprentices aged 25 or over, with the employer paying the other 5%. A levy payer that has run out of funds pays 25% for apprentices aged 25 or over.
Has the levy rate or threshold ever changed?
The 0.5% rate and the £15,000 allowance are the figures HMRC publishes for 2026/27, the same as when the levy started in April 2017. The £3,000,000 effective threshold is the allowance divided by 0.5%. What has changed is how the funds can be spent, through the apprenticeship funding rules for England.