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Over £3 million annual wage bill

What is the Apprenticeship Levy?
From April 2017 the way apprenticeships are funded was changed. Employers are split into Levy and non-Levy payers depending on the size of their annual wage bill.

Key Facts

  • Employers with an annual wage bill of over £3 million will contribute to the Apprenticeship Levy.
  • Employers with an annual wage bill of less than £3 million will not contribute to the Apprenticeship Levy.
  • The vast majority of employers will not contribute to the Apprenticeship Levy.
  • Apprentices who began before May 1st 2017 will continue on the funding arrangement at signup for the duration of their Apprenticeship. Apprenticeship starting after this date will be set up on the new funding arrangements.
  • If an Apprentice moves between levels (e.g. level 2 to level 3) the Apprenticeship will move to the new funding scheme.
  • All organisations with an annual wage bill of over £3 million will pay the Apprenticeship Levy.
  • 5% of the annual wage bill will be paid into the Digital Apprenticeship Service (DAS) monthly.
  • All employers will receive a 10% top up into their DAS account.
16 - 18 year olds19 - 24 year olds (if have EHC Plan or Care Leaver)All other apprentices
Employer pays100%100%100%


Employers will receive a grant of £1,000 for a 16 – 18 year old or 19 – 24 year old with EHCP or Care Leaver. This grant is paid in two halves, at 3 months and 12 months.

Employer A (annual wage bill over £3 million) chooses Peterborough Regional College to be their training provider and takes on an apprentice who is 18 when they begin their apprenticeship.

The value of the apprenticeship is £9000.

16 - 18 year oldsPayment
Employer A pays Peterborough Regional College100%£9000
Government pays to training provider0%£0
Employer A receives grantYes£1000


What is the Apprenticeship Levy?
Employers with an annual wage bill of over £3 million will contribute 0.5% of their PAYE bill into a digital account. This digital account can then only be used to pay for apprenticeship training for either current employees or new hires.

Does the Apprenticeship Levy effect my organisation?
Only if your organisation has an annual PAYE wage will of over £3 million.

Can employers use their digital account for any type of training courses?
No, levy funds can only be used for apprenticeships, they cannot be used to purchase any other forms of training.

What happens to the money once it is paid under the levy?
The money is automatically collected by HMRC and deposited into the employer’s digital account. The funds deposited will be made available via the Digital Apprenticeship Service (DAS) account, through which employers will be able to pay for apprenticeship training.

If an employer fails to spend their Levy contribution, what happens to the funds?
Employers have 24 months to spend their levy contribution, failure to do so results in the government taking the funds to spend on apprenticeships. Use it, or lose it.

What happens if I spend all my Levy but still want to recruit Apprentices?
It is still possible for employers who spend all their levy to still recruit Apprentices. This will result in employers being charged a 5% co-contribution towards the Apprenticeship costs which will not come from the levy fund and will need to be funded by employers.

For advice and guidance regarding the Apprenticeship Levy and how we can help your business, please call our business development team on 01733 762121 or email

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