The Apprenticeship Levy explained

What size of business is subject to the levy?

The levy threshold is calculated by size of payroll. Businesses with a wage bill of more than £3 million will be required to pay the levy. 

How much is the levy?

The levy amount is 0.5% of a company’s payroll, and every employer gets an allowance of £15,000 to offset against the amount they owe.  That’s why it only applies to businesses with a payroll over £3m. 

To explain; a business with a payroll of £6m would have an Apprenticeship Levy payable as follows:

£6,000,000 (payroll) x 0.5% (levy amount) -  £30,000  
£15,000 Less Levy allowance   
= £15,000 Levy amount payable

When will it be payable?

Businesses have been subject to the levy payment since May 2017 and it is payable monthly, via HMRC PAYE returns.

Where does the money go?

All businesses that pay the levy will be able to access their contribution in their online apprenticeship service account.  This account can be used to pay for apprenticeships training and assessment in England.

As levy payments go out monthly, businesses will start to see funds appear in their digital account a few working days later.

Businesses are required to to set up their account with the apprenticeship service. 

Does the government contribute anything?

Yes, but no longer directly into your digital account. The automatic 10% government top-up on monthly levy contributions officially ended on 31 July 2026. 

Using a business with a £6m payroll as an example: if you pay £15,000 in levy payments throughout the year, exactly £15,000 will accumulate in your digital account to pay for training and assessment. 

However, the government still provides substantial financial backing. If your digital funds run out, they will step in with a 75% co-investment to cover costs for older learners (meaning you will only be responsible for a 25% contribution paid directly to your training provider). For younger apprentices aged 16–24, the government fully funds 100% of the training costs, allowing you to preserve your levy funds for other training needs. 

Is there a time limit on spending the funds raised in a digital account?

Yes. Funds that businesses accrue in their online digital apprenticeship account will expire 12 months after they appear unless they are spent on apprenticeship training. This applies to the top-ups too.

So how will non levy payers pay for apprenticeship training?

If your business does not pay the Growth and Skills Levy, you can still access substantial government funding to run apprenticeship programmes. The system is designed to give you full control over choosing your training provider and agreeing on costs. 

Your financial contribution depends entirely on the age of your apprentice: 

• Aged 16 to 24: The government covers 100% of the training and assessment costs, meaning it costs your business nothing. 
• Aged 25 and over: The government asks you to make a 5% "co-investment" contribution toward the agreed cost, and they will pay the remaining 95%. 

Any 5% co-investment is paid directly to your chosen training provider, and you can usually agree on a schedule to spread this payment over the lifetime of the training. The government pays its portion directly to the provider.