Apprenticeship Levy
A 0.5% government charge on employers with pay bills above £3 million, deducted from the assignment rate before gross pay is set.
Introduced in April 2017, the apprenticeship levy applies to UK employers with an annual pay bill above £3 million. Umbrella companies — which collectively pay hundreds or thousands of contractors — far exceed this threshold and must pay 0.5% of their total pay bill to HMRC.
Like employer NI, the levy is deducted from the assignment rate before gross salary is calculated. On a £500/day rate (£120,000 annual assignment), the levy costs £600/year.
The funds go into the umbrella company's own apprenticeship training budget via the Apprenticeship Service — contractors do not benefit from this funding directly.
In 2026/27 the rate remains unchanged at 0.5%.