Apprenticeship Levy & Umbrella Companies
The 0.5% apprenticeship levy applies to umbrella workers — deducted from your assignment rate before gross pay is set.
Last updated: April 2026
What is the Apprenticeship Levy?
Introduced in April 2017, the apprenticeship levy charges employers with an annual pay bill above £3 million at 0.5% of their total pay bill. Umbrella companies — which collectively pay hundreds of contractors — far exceed this threshold, so they pay the levy on every worker's assignment rate.
Like employer NI, this cost is deducted from your assignment rate before your gross salary is calculated. The umbrella cannot recoup it from the agency after the rate is agreed.
The Formula
Apprenticeship Levy = Assignment Rate × 0.5%
Combined Pre-Gross Deductions
The apprenticeship levy stacks on top of employer NI and the umbrella margin — all taken before your gross salary is set:
| Deduction | Rate | On £120k (£500/day) |
|---|---|---|
| Employer NI | 15% above £5k | −£17,250 |
| Apprenticeship Levy | 0.5% of rate | −£600 |
| Umbrella Margin | e.g. £25/wk × 48 | −£1,200 |
| = Gross Salary | £100,950 |
Together, employer NI + levy + margin reduce the £120,000 assignment rate to a £100,950 gross salary — before income tax and employee NI are applied.
See the full step-by-step calculation →
HMRC: Apprenticeship levy guidanceSee All Your Deductions
Our calculator shows the levy alongside every other deduction.
Use Calculator2026/27 Rate
0.5% of assignment rate
£500/day → £600/year deducted