Apprenticeship Levy calculations

School Business Managers
How your school's apprenticeship levy is calculated

From 1 April 2017, the government introduced the Apprenticeship Levy to fund new apprenticeships.

In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. The levy will be charged at a rate of 0.5 per cent of an employer’s pay bill. 

How the levy is calculated

The employer’s pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions (NICs) such as basic pay, overtime, allowances, honorariums and additional hours.

You must include payments to:

  • all employees even those not earning enough to pay NI
  • employees under the age of 21
  • apprentices under the age of 25

Your pay bill doesn’t include:

  • earnings of employees under the age of 16
  • earnings of employees who aren’t subject to UK NICs legislation
  • earnings on which Class 1A NICs are payable, such as benefits in kind (expenses and mileage)

How can you check the amount of levy charged?

The levy will be charged each month to your 00 cost centre, against GL code 3120.
You can reconcile the amount charged by running your Staffing Actual Costs report and totalling the amounts shown in the Basic Salary, Overtime and Allowances columns and multiplying by 0.5 per cent.

You are able to do this on either a monthly or cumulative basis. However, please be aware that, due to system issues, the amounts charged for the period April to July contained minor errors. These will be corrected in the August charge, therefore it is recommended that you initially reconcile on a cumulative basis once this charge has been posted.

What to do if I think my charge is incorrect?

Raise an IBC Enquiry selecting the following options:

  • Type: My Team and Structure
  • Sub-type: Salary and additional payments
  • Enquiry: Other payments
  • Title: Apprenticeship Levy Charge