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The Levy

The Apprenticeship Levy explained

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Frequently Asked Questions

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The Apprenticeship Levy

As of 2017 the national apprenticeship programme has been be expanded by the introduction of the Apprenticeship Levy. The aim of the levy is to fund 3 million new apprenticeships by 2020, encouraging businesses to employ apprentices or retrain their existing staff.

The Levy F.A.Q.
Your business has to contribute towards the levy if your annual wage bill is in excess of £3 million.
The levy is charged at a rate of 0.5% of your annual pay bill. However, you can receive a levy allowance of £15,000 per year to offset against the levy you must pay.
You pay the Levy through HMRC, through the PAYE process alongside the normal tax and NICs.
The Levy payment is deducted from your corporation tax contribution.
If you contribute to an existing industry training levy, you are still required to pay the apprenticeship levy.
Once you have declared the Levy to HMRC you will be able to access funding through the new digital apprenticeship service account.
The digital apprenticeship service account is used to pay for training, and help you find training providers.
Employers who pay the Apprenticeship Levy and provide Apprenticeships are able to allocate their Levy contributions as digital vouchers to use to train their Apprentices. This voucher system only applies for Employers in England.
Online tools are available for employers and you should register your account now. Once registered, verify your PAYE schemes and link them to your account.
The Levy was introduced on 6 April 2017. Eligible employers have had to declare their liability to HMRC since May 2017 for levy due on their following months wage bill. Training funds for Levy paying employers has been accessible through the digital apprenticeship service account as of 22nd May 2017.
The Levy funding in the form of digital vouchers expires 18 months after they enter your digital apprenticeship service account unless you spend them on apprenticeship training.
The cost of an apprentice is spread over the duration of the apprenticeship training. The new system pays training providers one month in arrears for training they deliver. The payments for the training are taken directly from the digital apprenticeship service account monthly. Therefore, the account receives funds monthly as the business contributes towards the Levy and is deducted monthly to cover the training costs of the chosen apprentices.
The price covers the delivery of apprenticeship training towards a specific standard or framework, and the cost of assessing the apprentice. The training costs are taken from your apprenticeship service account and paid directly to us.
Co-investment is intended for employers, who at present are not required to contribute to the Levy, but would still like to take advantage of apprenticeship training. Co-investment means that the government contributes some of the training cost to the training provider. This contribution covers the delivery of apprenticeship training towards a specific standard or framework and the cost of assessing the apprentice. The co-investment rate is set each year, for the proportion of the money that you need to pay and the proportion the government will pay. Co-investment can also be used if you negotiate a price with your training provider that is more than the maximum allowed by the funding band, and then you must pay the difference between the band maximum and the agreed price.
As the Levy was introduced in early 2017 now is the time to start organising your training requirements to take full advantage of the apprenticeship training funds available. We can help you assess your needs and have the correct apprenticeship training available.

Apprenticeship employer helpline

  08454 309009



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Andy Turner

Director of Advanced Services at Cisco