Apprenticeship Levy: UK Employer Guide

The Apprenticeship Levy applies to employers with an annual UK payroll bill of more than £3 million. You pay 0.5% of your total pay bill into a digital account with HMRC — the levy account — which can then be used to fund apprenticeship training from an approved provider. Unused levy funds expire after 24 months.

If your payroll falls below £3 million, you do not pay the levy. But you can still access apprenticeship funding through a co-investment model: the government pays 95% of the training cost, and you contribute 5%. The practical cost of taking on an apprentice — the 5% contribution plus the apprentice's salary — is often significantly less than recruiting and training a non-apprentice employee.

Mellow's payroll engine calculates and tracks your monthly levy contribution. The levy is paid to HMRC through the PAYE process — it appears as a line item on your payroll summary. The actual spending of the levy on training is managed through the HMRC apprenticeship service online. Mellow does not manage that directly, but having accurate levy contribution data in your payroll record means you always know how much is available to spend.