Apprenticeship Levy Allowance

The Apprenticeship Levy is a 0.5% charge on the part of an employer's pay bill that exceeds £3 million. The £15,000 'Apprenticeship Levy Allowance' is the offset: every employer (or connected group of employers, sharing one allowance between them) can claim a £15,000 reduction against the levy each tax year. Mathematically, 0.5% of £3 million is £15,000 - so any employer with a pay bill of £3 million or less ends up with no liability.

The allowance is split monthly. Each tax month, the employer reports its month-to-date pay bill on the EPS and claims 1/12 of the £15,000 allowance (£1,250) against the levy due that month. Unused allowance from earlier months can roll forward within the same tax year but cannot roll across tax years. Connected employers (group companies) must agree at the start of the tax year how to split the single allowance between them.

Worked example: BrightCo has a UK pay bill of £4.2 million in 2026/27. Annual levy is 0.5% of £4.2m = £21,000. After the £15,000 allowance, BrightCo's net Apprenticeship Levy liability is £6,000 for the year - about £500 per month on average. The £6,000 sits in BrightCo's apprenticeship service account for spending on training and end-point assessment. If BrightCo doesn't spend it within 24 months, the funds expire on a monthly rolling basis. Smaller employers below the £3 million pay-bill threshold pay no levy and instead access apprenticeship funding through co-investment, where the government pays 95% of approved training costs.