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 for the cost of the apprenticeship levy.
For example, a company with an annual pay expense of £5 million 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 if an affiliated company with a cumulative pay bill exceeds the threshold.
When the levy allowance is shared across many connected firms, each business must report its portion of the funding to HMRC.