Apprenticeship Levy (Apprenticeship Levy) in the United Kingdom
The Apprenticeship Levy (Apprenticeship Levy) is a compulsory levy imposed on employers in the United Kingdom under the Skills Development Levies Act 9 of 1999. The levy is set at 1% of the the annual pay bill and is used to fund skills development programmes through the Sector Education and Training Authorities (SETAs). Apprenticeship Levy applies to all employers whose annual payroll exceeds the £3,000,000 threshold.
Apprenticeship Levy is calculated on the total remuneration paid to employees, which includes basic salaries, overtime payments, bonuses, commissions, and other allowances. The levy is collected by HMRC on a monthly basis as part of the P32 return, alongside PAYE and National Insurance contributions. Employers must ensure timely payment by the 7th of the month following the payroll period.
This free Apprenticeship Levy calculator helps UK employers quickly determine their monthly and annual Apprenticeship Levy obligations based on their workforce size and average salaries. It also checks whether your business exceeds the annual pay bill threshold of £3,000,000, below which Apprenticeship Levy registration is not required.
Frequently Asked Questions
What is Apprenticeship Levy in the United Kingdom?
Apprenticeship Levy is a 1% payroll levy paid by employers to fund skills development through SETAs (Sector Education and Training Authorities). It was introduced under the Skills Development Levies Act to promote learning and development in the UK workplace. Of the 1% collected, 80% goes to the relevant SETA and 20% goes to the National Skills Fund.
Who must pay Apprenticeship Levy?
All employers with an annual pay bill exceeding £3,000,000 must register for and pay Apprenticeship Levy. This includes companies, close corporations, partnerships, and sole proprietors who meet the threshold. Certain employers such as national and provincial government departments, public benefit organisations, and religious or charitable organisations may be exempt from Apprenticeship Levy.
How is Apprenticeship Levy calculated?
The Apprenticeship Levy is calculated at 0.5% of the annual pay bill, including salaries, overtime, bonuses, commissions, and other remuneration paid to employees. The calculation is straightforward: multiply your total monthly payroll by 0.01 (1%). For example, a monthly payroll of £100,000 would result in an Apprenticeship Levy payment of £1,000.
When is Apprenticeship Levy paid?
Apprenticeship Levy is paid monthly to HMRC together with PAYE and National Insurance on the P32 return, by the 7th of the following month. For example, Apprenticeship Levy for January must be paid by 7 February. Late payments attract penalties and interest from HMRC, so timely submission is essential.
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