The apprenticeship levy was introduced in 2017 as a way of helping employers to fund more apprenticeships. It was introduced to benefit businesses by boosting critical training and developing apprenticeship programmes.
The rules state that employers with a payroll of more than £3 million must pay a 0.5% levy on their total payroll (calculated on the percentage of workers based in England). The levy is paid at the end of every month through PAYE alongside income tax and national insurance contributions.
Levy contributions are held in a digital account which can be used by the employer to arrange and pay for apprenticeship training. The funds can only be spent on apprenticeship training or End-point Assessment according to apprenticeship levy rules. This is only applicable within England and therefore, apprentices funded by the levy must work at least 50% of their time within England. After 24 months, any unused funds are returned to the government.