Apprenticeship Levy Calculator

What The Apprenticeship Levy Calculator Covers

The Apprenticeship Levy is charged at 0.5% of an employer’s annual pay bill. Employers have a GBP 15,000 annual allowance to offset against levy liability. In practice, that allowance removes the levy where the pay bill is GBP 3 million or lower, because 0.5% of GBP 3 million is GBP 15,000. Employers with a pay bill above that level may need to report and pay the levy through PAYE.

This calculator gives two views. Annual mode estimates the full-year levy from an annual pay bill and allowance. Tax-month mode follows the cumulative method used for payroll reporting: pay bill year to date, allowance built up to that tax month, less levy already paid in the tax year. That makes it useful for finance teams checking an EPS figure before payroll is submitted.

Pay Bill And Connected Employers

For Apprenticeship Levy, pay bill means earnings on which Class 1 secondary National Insurance contributions are due. GOV.UK guidance says it includes earnings below the secondary threshold where the secondary NIC rate is 0%, such as certain employees under 21, apprentices under 25, armed forces veterans and some Freeport or Investment Zone cases. This is why the pay bill used for levy can differ from a simple employer NIC cost report.

Connected companies and connected charities share one GBP 15,000 annual allowance across the group. If a group splits the allowance between PAYE schemes or connected employers, enter the allowance allocated to the calculation in the tool. Do not give every company a separate GBP 15,000 allowance unless the connected-employer rules do not apply.

Worked Example: Annual Pay Bill Of GBP 4.2 Million

An employer with a GBP 4.2 million annual pay bill and the full GBP 15,000 allowance has a gross levy charge of GBP 21,000, because GBP 4.2 million multiplied by 0.5% is GBP 21,000. After the GBP 15,000 allowance, the annual levy estimate is GBP 6,000. If the pay bill is steady, that is roughly GBP 500 per tax month.

For a tax-month check, suppose the same employer is in month 6, has a year-to-date pay bill of GBP 2.1 million and has already paid GBP 2,500 levy. The cumulative gross levy is GBP 10,500. The cumulative allowance is GBP 7,500. The cumulative levy is GBP 3,000. After subtracting GBP 2,500 already paid, the month 6 amount due is GBP 500.

Threshold And Allowance Table

What To Include In The Pay Bill

• Employee earnings subject to Class 1 secondary National Insurance contributions.
• Earnings below the secondary threshold where secondary NIC is due at 0%.
• Pay across all PAYE schemes where the allowance is shared.
• Connected companies or charities where the group pay bill test applies.
• Corrections to the annual pay bill if errors are found later.

When This Estimate Is Not Enough

Use payroll software, HMRC Basic PAYE Tools or payroll advice for formal submissions, corrections, connected-company allocation decisions, multiple PAYE schemes, public-sector bodies, off-payroll worker effects, mergers, acquisitions or seasonal payrolls with credits. This page helps explain and cross-check the arithmetic, but it does not replace payroll reporting software.