The apprenticeship levy is paid by employers whose annual pay bill exceeds a set threshold. It is charged as a percentage of the pay bill, reduced by an allowance, and collected each month alongside PAYE and National Insurance.
Funds can be drawn back
Levy-paying employers accrue funds in a digital account which can be spent on approved apprenticeship training and assessment, with a government top-up. Unspent funds expire after a period, so employers who pay the levy but never use it are simply paying a tax. Non-levy-paying employers can still access funding on a co-investment basis.
- The pay bill for this purpose is broadly earnings subject to employer National Insurance
- Connected companies share a single allowance between them
- Funds cannot be spent on apprentice wages, only on training and assessment
Why it matters when hiring internationally
A growing UK team can cross the threshold without anyone noticing, at which point the levy becomes payable through payroll automatically. The connected-companies rule also means a group structure cannot multiply the allowance. Because unused funds expire, an employer that is going to pay it is better off planning to use it than treating it purely as a cost.