Apprenticeship levy
Apprenticeship levy

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Apprenticeship levy
  • Why was the apprenticeship levy introduced?
  • Who is required to pay the levy?
  • Example 1
  • Connected companies
  • Connected charities
  • How is the amount of the levy calculated and paid?
  • Example 2
  • Reporting and returns
  • Compliance and penalties
  • More...

This Practice Note sets out the details of the apprenticeship levy, which is payable by certain employers at a rate of 0.5% of the employer’s annual pay bill. A £15,000 annual allowance for employers means that the levy is only paid by employers whose annual pay bills exceed £3m.

The apprenticeship levy is administered by HMRC as part of the real time information (RTI) system. Employers pay the levy via the PAYE system.

Why was the apprenticeship levy introduced?

The apprenticeship levy has been payable since 6 April 2017. It was introduced by Finance Act 2016 (FA 2016), having been originally announced at Summer Budget 2015, and is intended to 'significantly increase the quantity and quality of apprenticeships in England' by creating an apprenticeships fund that each employer can then access to meet its individual needs.

Employers who pay the levy can access funding for apprenticeships through the online apprenticeship service. The details of accessing the fund and utilising the digital service are outside the scope of this Practice Note. For more information, see Practice Note: Apprenticeship levy—use of the funds by employers.

Who is required to pay the levy?

The apprenticeship levy is payable by anyone who is a secondary contributor in respect of employed earner(s) for Class 1 National Insurance contributions (NICs) purposes.

All employers will need to be aware of their apprenticeship levy obligations. In addition, entities

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