Apprenticeship levy guidance update

02 February 2017

Guidance on how to pay the apprenticeship levy has been updated with additional information to explain how to apply the levy in specific sectors:



Franchises with an annual pay bill of over £3 million (including any connected companies or charities) will have to pay the levy. You’ll have an annual allowance of £15,000 for all of the franchises under your control. You can choose to share the allowance across the franchises you control or across your PAYE schemes.

Off-payroll working in the public sector

Payments from a public sector employer to a personal service company, a partnership or other individual which are subject to off-payroll working reforms must be included in the public sector employer’s pay bill. This is because the public sector employer will be liable to pay the Class 1 NICs for workers engaged through such intermediaries from April 2017.

These changes don’t apply for services provided through intermediaries such as a personal service company to clients in the private sector.

Short-lived companies

Short lived companies such as special purpose vehicles will have to pay the levy if they’re liable for Class 1 secondary NICs. You’ll have a full £15,000 allowance if the special purpose vehicle has been set up part way through the tax year. You’ll have to check whether you’re connected to another company or charity at the start of the following tax year.

Managed service companies

If you’re a managed service company you’ll have to pay the levy if you have an annual pay bill of over £3 million. If you’re connected to another employer, you may have to pay the levy if your pay bill is less than £3 million.

Employment or recruitment agencies

You’ll need to pay the levy if all the following apply:

  • you supply labour (including subcontractors) to a client
  • you pay Class 1 secondary NICs on the earnings of those workers
  • your pay bill exceeds £3 million (including any connected companies or charities)

Joint ventures

If you’re in a joint venture partnership where 2 companies each have a 50% share in a further company, neither company will have overall control. As a result, the joint venture would not be connected to any other companies. The 2 companies and the joint venture would therefore each be entitled to their own levy allowance of £15,000.

Other types of joint ventures will get a full £15,000 allowance if they’ve been set up part way through the tax year. They’ll need to check if they’re connected to another employer at the start of the next tax year to work out their allowance for the following year.


For voluntary-aided schools, foundation schools, free schools and academies, the governing body is the employer. Each governing body will be entitled to an allowance of £15,000.

For other maintained schools, the local authority is the employer. The local authority remains legally responsible for payment of the Apprenticeship Levy for schools under their control, even if they’ve delegated responsibility for payroll including payment of Class 1 secondary NICs. Each local authority has an annual allowance of £15,000.

The employer for faith schools will be the local authority if the school is voluntary-controlled, otherwise it will be the governing body.

Multi-academy trusts will get a single annual allowance of £15,000.

If a school becomes a voluntary-aided school, foundation school, free school or academy part way through a tax year, the academy’s governing body will be responsible for the Apprenticeship Levy from this point and get a full allowance of £15,000.