All You Need to Know About the Apprenticeship Levy
A practical guide to who pays the levy, how apprenticeship accounts work and what funding may be available to employers that do not pay the levy.
What Is the Apprenticeship Levy?
The Apprenticeship Levy was introduced in 2017 to help fund the development and delivery of apprenticeship training.
Employers fall into two broad groups: organisations that pay the levy and organisations that do not. Both groups can access apprenticeship funding, but the way in which the funding is managed is different.
This page provides a general overview. The funding route, contribution and eligibility should always be confirmed against the rules that apply when the apprentice starts.
Levy and Non-Levy Employers
Your annual pay bill determines whether your organisation pays the Apprenticeship Levy.
Levy Payers
Levy-paying employers pay through the PAYE system. Their levy liability is calculated at 0.5% of the annual pay bill, subject to the available annual levy allowance.
Funds are managed through the employer’s online apprenticeship service account and can be allocated to approved apprenticeship training and assessment.
- Manage apprenticeship funds online
- Add apprentices and training providers
- Approve training costs and programme details
- Track available and committed funds
Non-Levy Payers
Employers that do not pay the levy can still receive government funding towards eligible apprenticeship training and assessment.
For apprentices who do not qualify for full government funding, the employer will normally contribute towards the training cost through co-investment.
- Reserve apprenticeship funding online
- Receive government support towards training
- Access eligible levy transfers
- Manage apprentices through the digital service
How Levy Payments Work
Levy payments are collected by HMRC through PAYE and made available through the employer’s apprenticeship service account.
Calculate the Liability
The levy is calculated using the employer’s annual pay bill and the available levy allowance.
Pay Through PAYE
Levy amounts are reported and paid to HMRC as part of the employer’s PAYE processes.
Manage Funds Online
Employers use the apprenticeship service to manage funds, apprentices and approved providers.
Approve Training Payments
Funds are released to the training provider following approval of the apprenticeship details.
What Can Levy Funds Pay For?
Funds Can Be Used For
- Approved apprenticeship training
- Eligible apprenticeship assessment
- Programmes delivered by approved providers
- Costs up to the relevant funding-band maximum
Funds Cannot Normally Be Used For
- Apprentice wages or salaries
- Travel and accommodation
- Personal Protective Equipment or ordinary tools
- Statutory licences to practise
- General programme setup or recruitment costs
- Training costs above the funding-band maximum
Levy Funds Do Not Last Forever
Funds entering employer accounts are subject to expiry rules. Employers should review their balance regularly and create workforce-development plans before available funds expire.
Identify recruitment, upskilling and succession-planning opportunities early so apprenticeship funds can be used effectively.
Government Funding and Co-Investment
Employers that do not pay the levy can access government support through their apprenticeship service account.
Employer Co-Investment
Where full government funding does not apply, the non-levy employer normally contributes 5% of the eligible training and assessment cost. Government pays the remaining eligible amount up to the funding-band maximum.
Full Government Funding
Government may cover 100% of eligible training and assessment costs for younger apprentices and certain eligible apprentices with an Education, Health and Care Plan or care experience.
Levy Transfers
A levy-paying employer may transfer available funds to another organisation to support eligible apprenticeship training and assessment.
Managing Apprenticeships Online
Levy and non-levy employers use the digital apprenticeship service to manage their programmes and funding.
Register an employer apprenticeship account
Add the employing organisation and PAYE details
Reserve funds or review the available levy balance
Add apprentices and approve programme information
Confirm the selected training provider and costs
What Else Might the Employer Need to Pay?
Apprenticeship funding does not remove every cost associated with employing and supporting an apprentice.
Employers should budget for wages, employment benefits, travel where applicable, equipment, PPE, supervision and any training costs that exceed the relevant funding limit.
The total cost will depend on the role, apprenticeship, employee and structure of the programme.
Why Use Apprenticeship Funding?
Build Future Talent
Recruit and develop people around the long-term skills needs of your organisation.
Upskill Existing Staff
Use apprenticeships to support progression and continued professional development.
Address Skills Gaps
Create structured learning around technical, operational and leadership requirements.
Support Retention
Give employees a recognised route for development and career progression.
Talk to Our Employer Team
We can help you understand your apprenticeship account, likely funding route, programme costs and how to use apprenticeships within your workforce.