Your ‘pay bill’ is your total employee earnings subject to Class 1 secondary NICs.
Employers get a £15,000 fixed annual allowance to offset against the Levy payment. Employers who operate multiple payrolls are able to claim one allowance for the Levy.
An example: if you have a £3m pay bill, you have a Levy bill of £15,000 (at 0.5% of employer pay bill). The allowance is offset against this so your Levy payment is £0.00.
Employer A: 1,000 employees, each with a gross salary of £20,000
- Annual payroll: 1,000 x £20,000 = £20,000,000
- Apprenticeship Levy applied: 0.5% x £20,000,000 = £100,000
- After Tax allowance applied: £100,000 – £15,000 means £85,000 Levy payment
Employer B: 500 employees, each with a gross salary of £20,000
- Annual payroll: 500 x £20,000 = £10,000,000
- Apprenticeship Levy applied: 0.5% x £10,000,000 = £50,000
- After Tax allowance applied: £50,000 – £15,000 means £35,000 Levy payment
Employer C: 100 employees, each with a gross salary of £20,000
- Annual pay bill: 100 x £20,000 = £2,000,000
- Levy applied: 0.5% x £2,000,000 = £10,000
- After allowance applied: £10,000 – £15,000 means £0 Levy payment
You can find out more information and how much employers will be able to spend on different apprenticeships in the Government’s latest funding pages.
where the cost of the training you wish to buy is greater than the funding cap for a particular standard or framework
where your organisation has spent all your Levy contribution and top-up and wants to spend more on apprenticeship training.