How to calculate the apprenticeship levy
Your annual levy is 0.5% of pay bill minus a £15,000 allowance; this page shows the formula, two worked examples and a calculator.
The formula
Annual levy = (pay bill × 0.5%) − £15,000 allowance. Pay bill = earnings subject to Class 1 NICs (wages, bonuses, commission; not benefits in kind). The allowance is why only pay bills above £3m pay. Paid monthly via PAYE; government adds a 10% top-up.
Example: £5m pay bill
0.5% of £5,000,000 = £25,000, minus £15,000 = £10,000/yr (~£833/mo); with top-up ~£11,000 available.
Example: £12m pay bill
0.5% of £12,000,000 = £60,000, minus £15,000 = £45,000/yr; with top-up ~£49,500 available.
Calculating the levy: common questions
What counts towards the pay bill?
Total earnings subject to Class 1 NICs, including wages, bonuses and commission. It excludes benefits in kind, and the earnings of some younger employees and apprentices.
What is the £15,000 allowance?
A fixed annual allowance that offsets your levy. It is shared as one allowance across connected companies.
What are the current levy rates?
The rate is 0.5% of the pay bill, set when the levy began in 2017. The £3 million threshold and £15,000 allowance are unchanged.
How do connected companies calculate the levy?
You add the pay bills together, apply one £15,000 allowance, and decide at the start of the tax year how to split it between the companies.
Is the levy the same as what I pay for training?
No. The levy is the tax. What an apprenticeship costs, and how much the government covers, is separate, see how funding works.
Next step
Once you know your levy, plan how to spend it before funds expire after 24 months.
Work with LifetimeTurn the number into a plan
Share your figure and your priorities, and we'll map your levy to the programmes that move your business.