Apprenticeship levy and funding

A payroll tax on larger employers that funds apprenticeship training — and a subsidy for smaller ones.

What it means

Employers with an annual pay bill above a threshold pay the apprenticeship levy through PAYE and draw the funds back for apprenticeship training. Smaller employers do not pay it and get most training costs funded.

Why it matters

For a small business this is a genuine subsidy: the great majority of the training cost of an apprentice is met, and there are additional incentive payments for younger apprentices.

What it looks like in practice

Levy-paying employers can transfer unused funds to smaller businesses, which is under-used on both sides and worth asking about.

What to watch out for

Assuming apprenticeships are only for school leavers. There is no upper age limit and existing staff can be put through them, including at degree level.

Where to get proper advice

The apprenticeship service on GOV.UK, and a training provider, who will usually handle the paperwork.