The Apprenticeship Levy is a 0.5% charge on larger employers, used to fund apprenticeship training. Here is who pays for 2026/27, how the £15,000 allowance and £3 million threshold work, the 10% government top-up in England, and how non-levy-paying smaller employers still get funding.
Who pays, how it is calculated, the allowance and top-up, how to spend funds, and what smaller employers get instead.
The Apprenticeship Levy is paid by employers with an annual pay bill over £3 million. It is charged at 0.5% of the total pay bill (earnings liable to employer Class 1 NIC), reduced by an annual levy allowance of £15,000. Because of the allowance, only the part of the pay bill over £3 million is effectively charged, so most small and medium employers pay nothing.
An employer with exactly a £3 million pay bill pays nothing (0.5% × £3m = £15,000, fully covered by the allowance). The levy is reported and paid monthly through PAYE alongside tax and NIC.
In England, levy payments go into a digital apprenticeship service account, and the government adds a 10% top-up — so £10,000 of levy becomes £11,000 of training funds. You spend the funds on approved apprenticeship training and end-point assessment with registered providers. Unused funds expire after 24 months, so plan their use.
Levy-paying employers can transfer a portion of their annual funds to other employers — for example smaller businesses in their supply chain — to fund apprenticeships there. This helps use funds that might otherwise expire.
Groups of connected companies or charities share a single £15,000 allowance and decide at the start of the year how to split it between their PAYE schemes. Getting the split right avoids over- or under-paying the levy.
If your pay bill is under £3 million you do not pay the levy, but you can still access government-funded apprenticeship training. Most non-levy training is heavily subsidised, and from August 2026 apprentices under 25 at non-levy-paying employers have their training fully funded. You access this through the apprenticeship service.
Paying the levy is a tax obligation; using the funds for apprenticeships is optional but valuable. Many levy payers under-use their funds and let them expire — treat the digital account as a training budget you have already paid for.
gov.uk pay Apprenticeship Levy · manage apprenticeship funds.
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Who pays, how it is calculated, the allowance, the top-up and using funds — answered for 2026/27.
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