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HMRC internal manual

Apprenticeship Levy Manual

Apprenticeship Levy Allowance: introduction

Part 6 Finance Act 2016

Income Tax (Pay As You Earn) Regulations 2003

Each employer has an annual Apprenticeship Levy allowance of £15,000 to offset against their levy liability. The effect of this allowance is that only those employers with an annual pay bill of over £3 million will have to pay and report the levy. This is because 0.5% of an employer’s £3 million pay bill is £15,000, which is fully removed by the £15,000 Apprenticeship Levy allowance.

However, where the connection rules apply, a pay bill less than £3 million may attract a levy liability, depending on how the allowance is shared. This is because where an employer is connected to other employers by virtue of the connected companies or the connected charities rules, they can only have one annual allowance of £15,000 for all the connected companies or charities within their group. 

The £15,000 Apprenticeship Levy allowance cannot be used to pay for apprenticeship training.