The apprenticeship levy is a charge on employers with an annual pay bill above £3 million. It is set at 0.5% of the pay bill, with an allowance that offsets the first portion of the liability. Employers who pay it can draw the funds back down to spend on apprenticeship training, through an apprenticeship service account.
Levy funds can be spent on apprenticeship training and assessment. They cannot be spent on apprentice wages, travel, or the employer's own administrative costs. Unspent funds expire after a set period, which is why levy payers often talk about funds “going back to the Treasury”.
Levy payers can also transfer a proportion of their annual funds to other employers, which is one route by which smaller organisations access apprenticeship training.
The Growth and Skills Levy
The Growth and Skills Levy is the broader framework the apprenticeship levy now sits inside. The charge on employers is unchanged – still 0.5% of the pay bill above £3 million – but what the funds can be spent on has widened. Levy funds can now be used for apprenticeships, foundation apprenticeships and apprenticeship units.
Two changes took effect on 1 August 2026:
- The automatic 10% government top-up on new funds entering an employer's account ended. Funds already in an account keep it.
- New funds now expire after 12 months rather than 24 months. Existing funds keep the original expiry.
The practical effect of the shorter expiry is that unspent funds are lost sooner, which sharpens the incentive to plan apprenticeship recruitment against the levy year rather than leaving it late.
What the statistics show
DfE publishes a funding split for apprenticeship starts. In the current period, 207,900 starts (67.3%) were supported by apprenticeship service account levy funds, and 100,880 were funded another way.
What the statistics do not show
This is where most commentary about the levy overreaches. The published apprenticeship data records whether a start was supported by levy funds. It does not record:
- which employer paid the levy, or how much;
- whether a particular apprenticeship would have happened without the levy;
- how much levy income was raised or how much expired unspent;
- the level or occupation of levy-supported starts, since the funding split is not published against level in this dataset.
It is frequently argued that the levy pushed employers towards higher-level apprenticeships for existing staff. That may well be right – higher apprenticeships have grown from 48,150 starts in 2017/18 to 140,730 in 2024/25 – but the published data does not link funding type to level, so that remains a plausible inference rather than a finding. Anyone asserting it as established fact is going beyond the statistics.
Policy keeps moving
The levy and the rules around it have been reviewed and adjusted repeatedly, and 2025–26 was an unusually active period: the Growth and Skills Levy framework, the end of the top-up, the shorter expiry, foundation apprenticeships, apprenticeship units and the Level 7 restriction all landed within about a year. Anything written about the current rules dates quickly, this page included.