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Apprenticeship Levy: who pays, the 0.5% rate and how levy funds expire

The Apprenticeship Levy is paid by employers with an annual pay bill above £3 million, and the funds can then be spent on apprenticeship training in England. This page explains how the levy is calculated, how long the funds last and how they can be shared with other businesses.

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Answers are written by a language model solely from this base's documents, with numbered sources. They can be wrong and aren't legal, medical or financial advice: check the sources before any important decision.

How the levy is calculated

The levy is charged at 0.5% of the annual pay bill, reduced by an allowance of £15,000 a year. Employers pay it monthly if their annual pay bill is over £3 million, including any connected companies or charities. It is reported and paid monthly through the Employment Payment Summary.

The pay bill includes all payments subject to employer Class 1 secondary National Insurance contributions, such as wages, bonuses and commissions, including pay of employees under 21 and apprentices under 25. It excludes earnings of employees under 16 and benefits in kind subject to Class 1A contributions.

Connected companies or charities share a single £15,000 allowance, and unused allowance cannot be carried into the next tax year. Paying an industry training levy, such as the Construction Industry Training Board levy, does not remove the obligation to pay.

When levy funds expire

Funds entering employer accounts from August 2026 onwards expire after 12 months if unspent. For example, funds entering in September 2026 become unavailable in September 2027. Funds already in accounts before August 2026 keep the 24-month expiry period.

The account works on a first-in, first-out basis, so payments always use the oldest funds first. The 10% government top-up on monthly levy contributions stopped from 1 August 2026.

Transferring levy funds to other businesses

Levy payers can transfer up to 50% of their previous financial year's levy funds, with the English percentage applied, to any other business, whether or not it pays the levy. The receiving business needs an apprenticeship service account.

Transferred funds pay for 100% of training and assessment up to the funding band maximum, for the whole duration of the apprenticeship. They can only be used for a new apprenticeship start, except when an apprentice changes employer.

Frequently asked questions

Do public bodies share one allowance?

No. Public bodies (excluding charities) each get a full levy allowance because they are not treated as connected companies. NHS trusts and other health service bodies follow the connected companies rules.

Is a levy transfer a one-off payment?

No. By agreeing a transfer, the sending employer commits to paying for a specific apprenticeship until it is completed, which can span several financial years. Transfer payments are made monthly and take priority over the sender's own apprenticeship payments.

What happens if our levy account is reset?

Levy accounts are reset where no levy declarations have been made to HMRC in the previous 24 months. Changes to levy or non-levy status are not backdated, so only eligible starts from the date of change benefit.

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Claude Code
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{
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    "kopik-uk-apprenticeships-england-employer-guide": {
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      }
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}

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