What is the Apprenticeship Levy rate in the UK and who must pay it?

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Apprenticeship Levy: Rate, Threshold, and Rules in 2026 The Apprenticeship Levy is a compulsory payroll charge designed to fund apprenticeship training in England. It applies to all UK employers with an annual pay bill exceeding GBP 3,000,000. The Rate The levy is charged at 0.5% of total annual pay bill above GBP 3,000,000. Each employer also receives a GBP 15,000 annual allowance to offset against their levy liability, meaning only the amount above GBP 3 million is subject to the 0.5% charge. Example: An employer with a GBP 5,000,000 pay bill pays: (GBP 5,000,000 x 0.5%) -- GBP 15,000 = GBP 25,000 -- GBP 15,000 = GBP 10,000 levy per year. The levy is paid monthly to HMRC via PAYE alongside Income Tax and National Insurance. How Levy Funds Are Used Levy funds are deposited into a digital apprenticeship service account on the government's online portal. Employers can then spend these funds on apprenticeship training and end-point assessments with ESFA-registered training providers. Funds expire if unused after 24 months. Levy Transfer Levy-paying employers can transfer up to 50% of their unused annual levy funds to other employers (including smaller supply chain businesses) to fund their apprenticeship training costs. Non-Levy Employers (Pay Bill Below GBP 3m) Smaller employers with a pay bill below GBP 3,000,000 do not pay the levy but can still take on apprentices using government co-investment funding. In most cases the government pays 95% of apprenticeship training costs and the employer contributes 5%. Employers with fewer than 50 employees training apprentices aged 16 to 18 (or care leavers up to 24) pay nothing -- the government covers 100%. Note: Apprenticeship Levy policy specifics, including any reforms announced in the 2025 Autumn Budget, should be verified against the latest HMRC and Department for Education guidance, as the levy framework has been subject to ongoing review.

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