What is an apprenticeship levy?

The apprenticeship levy is a UK-based tax that certain employers are required to pay to support apprenticeship programs in the country.

The apprenticeship levy was first introduced in 2017. The goal of the levy is to increase the number of apprenticeship programs in the UK and promote occupational growth for young people.

How does an apprenticeship levy work?

The apprenticeship levy is calculated at a rate of 0.5% of an employer’s yearly pay bill. It’s paid through PAYE process, which is the UK’s Revenue and Customs tax system used to collect income tax and National Insurance’s annual wage bill.

All employers who have an annual bill of £3 million and above are required to pay this levy. Upon doing so, they can get access to funds to build their apprenticeship training programs.

Employers with an annual pay bill that’s under £3 million aren’t required to pay the levy but can still get access to these funds.

Businesses that employ apprentices ages 16 to 18 who were previously in care or apprentices from disadvantaged areas are entitled to additional funding. Funds can be used to pay for the training course an apprentice completes, enabling companies to grow their own talent.

Apprenticeship levy  for non-UK companies with UK-based employees?

For non-UK companies with UK-based employees, the apprenticeship levy can be difficult to navigate. These companies can struggle with compliance requirements surrounding the levy, meeting the UK’s standards of what qualifies as an apprenticeship program, or even accessing the UK government’s online apprenticeship service.

Partnering with a UK-based payroll provider could be the solution to fill these knowledge gaps. Alternatively, a payment delivery platform with expertise in global workforce payments and compliance standards could also do the trick, taking care of organizational challenges that come with the apprenticeship levy.