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How much will the apprenticeship levy cost?

By Chris Ash on Nov 24, 2016 6:44:00 PM

Cash Register header.jpg

Cash Register header.jpg

Last time we talked about the digital apprenticeship service and how you need to start planning now. If you have not already used the free planning tool provided by BIS then I strongly recommend that you do so in conjunction with this post. If you need help with this please feel free to let me know once you’ve finished reading.


Your apprenticeship levy bill will be calculated monthly and be based upon your total paybill. You will have access to this money for investing in apprenticeships for employees who work in England.


The amount that you pay is 0.5% of your total paybill, less a £15,000 annual allowance that all employers will receive. As the allowance reduces what you pay, employers with a paybill of less than £3,000,000 will not pay the apprenticeship levy (0.5% of £3 million is £15,000).


The amount you pay monthly is based upon your monthly PAYE returns submitted to HMRC.  For example a monthly paybill of £500,000 is the equivalent of an annual paybill of £6 million. 0.5% of £6 million is £30,000, less your £15,000 allowance equals an annual apprenticeship levy of £15,000. If this is divided by 12 months then that is approximately a monthly apprenticeship levy payment of £1250.


This £1250 is added to your monthly return, alongside other employer tax payments. The £1250 will then be subsequently added to your digital apprenticeship account (see our my last blog) along with a Government top up of 10% (in this example £125). As a result the digital account would receive £1375 per month.


If the numbers haven’t put you off and you are still reading this then lets just take a minute to review things.

  1. Firstly, you have no choice other than to pay the apprenticeship levy
  2. It will need to be paid monthly via your normal payroll tax submissions to HMRC.
  3. You will receive a 10% top up straight into your account along with your contribution.
  4. The first funds will appear in your account from May 2017 as by then you will have submitted April 2017’s return.


 If you need help with this, then the free planning tool previously mentioned allows you to work out both the monthly amount that will appear in your digital account as well as factoring in the proportion of employees that work in England. Alternatively, feel free to contact me and I will be happy to point you in the right direction or provided free advice and guidance.

Chris Ash

Written by Chris Ash