Levy Paying Employers

Levy Paying Employers

You will be a Levy-payer if your gross (including bonuses but excluding NI contributions) annual wage bill exceeds £3m. The Levy is calculated at 0.5% of your gross wage bill, less an annual allowance of £15,000.

Monthly sums collected under the levy by HMRC through PAYE are deposited into an employer’s digital account, known as the Training Apprenticeship Service (TAS). The government ‘tops-up’ up the monthly amounts held in the account by 10%, to further encourage use of an employers’ levy pot for employing apprentices.

The levy pot can only be used for apprenticeship training and no other form of staff training or development; nor can it be used for other employment costs. Levy funds are ‘withdrawn’ from an employer’s TAS account, if not used within 24 months. Once the levy pot is depleted, it is still possible to recruit and train additional apprentices. On agreement of a price for apprenticeship training with an employer, the government will co-invest’, paying 90% of the cost, with the employer paying the balance (10%).

The government’s contribution will be subject to a funding cap. Each approved apprenticeship (Framework or Standard) will fit into a funding band. There are 15 funding bands ranging from £1,500 (Band 1) to £27,000 (Band 15).

Where a price is agreed above the band cap, the employer will be required to make up the difference. This may arise for example, where the employer is seeking ‘added value’ services, above and beyond the apprenticeship requirements.

For a full list of the funding bands, see the table below. To understand the full process for recruiting an apprentice and operating your TAS account, please submit an enquiry here.

wdt_ID Number Band Limit
1 1 £1,500
2 2 £2,000
3 3 £2,500
4 4 £3,000
5 5 £3,500
6 6 £4,000
7 7 £5,000
8 8 £6,000
9 9 £9,000
10 10 £12,000

Government Incentives

There are various forms of government incentives available to Levy and Non-levy employers according to age of apprentice; whether the apprentice is ‘disadvantaged’; and according to the size of company, in terms of number of employees:

16-18
year olds

Government will pay £1,000 to employers, and a further £1,000 to training providers if they train a 16-18 year old apprentice

Disadvantaged
young people

Government will pay £1,000 to employers, and a further £1,000 to training providers if they train 19-24 year olds formerly in care or who have a Local Authority Education, Health and Care plan.

Small
Employers

Employers with fewer than 50 employees will have 100% of the training and assessment costs covered when training a 16-18 year old (or 19-24 year old formerly in care or has a Local Authority Education, Health and Care plan.

Examples of Funding in Practise

The examples below demonstrate the difference in funding approach to Levy and Non-Levy paying employers and also the potential impact on government incentives:

wdt_ID - Funding Band 4
1 Maximum Core Government contribution £3,000
2 Employer contribution if the maximum cap is claimed £333
3 Co-funding for training and assessment if the maximum cap is claimed £3,333
4 Additional Employer Incentive payments
5 Recruiting a 16-18 year old or 19-24 year old with a LAEHC plan £1,000
6 As above, plus a small business ( £333
7 Government Contribution £4,333
8 Employer Contribution -£1,000

Non Levy Payers

For Non Levy paying employers, follow the link below to read more.

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