UK Apprenticeship Levy (2026/27)
The Apprenticeship Levy is a 0.5% tax on UK employers' annual pay bill, offset by a £15,000 Levy Allowance. Practically this means the levy only bites once the annual pay bill exceeds £3 million. Collected funds sit in the employer's Apprenticeship Service account for 24 months and can be used to pay approved apprenticeship training.
Levy due by pay bill
| 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 |
Frequently asked questions
- What is the UK Apprenticeship Levy?
- The Apprenticeship Levy is a 0.5% tax on UK employers' total wage bill, in force since 6 April 2017. Employers receive a £15,000 annual Levy Allowance which offsets the first £15,000 of liability - so the levy only effectively kicks in when an employer's annual pay bill exceeds £3 million. Funds collected sit in the employer's Apprenticeship Service account for 24 months and can be used to pay for apprenticeship training delivered by approved providers.
- Who pays the Apprenticeship Levy?
- All UK employers with an annual pay bill (gross salaries paid through PAYE, including bonuses and pension contributions paid into salary, but excluding earnings below the NI Secondary Threshold) exceeding £3 million. The levy is administered alongside PAYE - paid monthly through the employer's Real Time Information (RTI) return.
- How does the £15,000 allowance work?
- The £15,000 Levy Allowance is divided across the 12 months of the tax year (£1,250 per month). An employer with a £3 million annual pay bill pays £1,250 a month in levy gross (0.5% × £250,000) but uses the £1,250 monthly allowance, netting £0 in levy. Above £3 million, each additional £200 of monthly pay bill adds £1 of levy. Connected companies must share a single £15,000 allowance across the group.
- How can the levy be used?
- Levy-paying employers can use their account funds to pay for approved apprenticeship training and end-point assessment for their own employees. Funds expire 24 months after they enter the account if unspent. From April 2018 employers can transfer up to 25% of their annual levy to other employers (e.g. supply chain partners, SMEs in their sector) - useful for big employers who cannot deploy their full levy on in-house apprentices.
- What about employers below the £3m threshold?
- Non-levy-paying employers (under £3m pay bill) do not contribute but can still access apprenticeship funding. Government pays 95% of the training cost (capped at the apprenticeship's funding band) with the employer paying 5%. From April 2024 employers in scope of the new ESFA rules pay 0% for under-22 apprentices in many cases.
- Has the levy rate or threshold ever changed?
- No - the 0.5% rate and £15,000 Levy Allowance have been unchanged since the introduction in April 2017. Successive Treasury reviews have considered raising either figure but no change has reached legislation as of the 2026/27 tax year. The £3 million effective threshold is the £15k allowance divided by 0.5%.