Apprenticeship Levy Calculator

The Apprenticeship Levy takes 0.5% of an employer's total annual pay bill, counting everything subject to Class 1 secondary National Insurance, so salaries, wages, bonuses and commissions all form part of it. Every employer also receives a £15,000 annual allowance to set against the charge, which is why only employers with a pay bill above £3,000,000 a year actually part with anything. The £3,000,000 line is less a separate rule than the point at which 0.5% of the pay bill catches up with the allowance. Collection happens month by month through PAYE, alongside the rest of the payroll deductions, rather than as one annual bill.

Each month you take 0.5% of that month's pay bill and subtract one twelfth of the allowance, which is £1,250. A negative result means nothing is due for the month, so a business with an uneven payroll can drift in and out of paying across the year. Connected employers, meaning companies linked by common ownership, share a single £15,000 allowance between them, and how it is divided has to be declared to HMRC at the start of the tax year. Across a full year a £4m pay bill produces £5,000 of levy, while a £10m pay bill produces £35k.

What you pay does not simply vanish into general taxation. It arrives as digital funds in your apprenticeship service account and can be spent on approved apprenticeship training and assessment bought from registered providers, and from August 2026 on apprenticeship units, short courses in a specific skill. It cannot go towards the apprentice's wages, only the training cost paid to the provider. The automatic 10% government top-up ended on 1 August 2026, and funds entering the account from then expire after 12 months rather than 24, which is how so many large employers quietly forfeit part of their levy each year, since unused levy is a tax that was never reclaimed. Planning apprenticeship starts early enough to spend the money is the whole game.

Levy payers who cannot use everything can pass up to 50% of their unused funds to smaller businesses that pay no levy, applying through apprenticeships.gov.uk. The money goes towards upskilling supply chain partners, supporting charities or developing a sector, and a good many large retailers and professional services firms move funds to smaller suppliers rather than watch them lapse.

Employers below the £3m pay bill are not shut out of the system. For apprentices aged 16 to 24 the government pays the full training cost up to the funding band maximum, and the same goes for a levy payer whose funds have run out. For apprentices aged 25 and over it pays 95% at an employer that pays no levy, leaving 5% to find, and 75% at a levy payer with no funds left. Employers get £1,000 for taking on an apprentice aged 16 to 18, and from 1 October 2026 employers that pay no levy get a hiring payment of up to £2,000 for a new apprentice aged 16 to 24. For the money involved this is unusually good value for entry-level recruitment and upskilling, and plenty of smaller firms never look at it.