What is Apprenticeship Levy? UK Definition 2026/27
Quick Answer
A 0.5% tax on employers with pay bills over £3 million to fund apprenticeships.
Definition of Apprenticeship Levy
The Apprenticeship Levy is a UK tax charged at 0.5% on employers annual pay bills exceeding £3 million. Each employer receives a £15,000 annual allowance, meaning only pay bills above £3 million are effectively taxed. The levy funds apprenticeship training and can be used to pay for approved apprenticeship programmes.
Apprenticeship Levy — Key Facts for 2026/27
| Rate | 0.5% |
| Allowance | £15,000 per year |
| Pay bill threshold | £3 million |
| Fund validity | 24 months |
How Apprenticeship Levy Works — Example
- 1Annual pay bill: £5 million
- 2Gross levy (0.5%): £25,000
- 3Annual allowance: £15,000
- 4Levy payable: £10,000
- 5Available for apprenticeship training
How Apprenticeship Levy Affects Your Tax
Large employers must pay the levy but can use accumulated funds for apprenticeship training. Smaller employers can access government co-investment for apprenticeships. Unused levy funds expire after 24 months.
Official HMRC Guidance on Apprenticeship Levy
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Apprenticeship LevyFrequently Asked Questions about Apprenticeship Levy
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.