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What Is The Apprenticeship Levy Calculated On

Employers with annual payrolls of more than £3 million are required to contribute to paying for apprenticeships. The levy requires all UK-based companies with annual payrolls of more than £3 million to invest in apprenticeships. This tax also applies to firms with a pay bill of less than £3 million per year.

However, all companies will get a levy allowance of £15,000 per year, which can be used to the cost of the apprenticeship levy.

What is the apprenticeship levy calculated on?

A company with an annual pay expense of £5 million, for example, will be taxed £10,000 per year. (0.5 percent x £5,000,000) – £15,000 = £10,000 annual levy payment

On the other hand, companies must notify HMRC if their annual pay bill exceeds £3 million or an affiliated company with a cumulative pay bill exceeding the threshold.

When the levy allowance is shared across many connected firms, each connected business must report its portion of the funding to HMRC.

Updated on December 23, 2021

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