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The Employer's Guide to the Apprenticeship Levy & Growth and Skills Levy (2025/26 Update)

Funding Guidance

Maximising Your Apprenticeship Funding

Funding rules are constantly evolving. Whether you are a large levy-paying organisation or a Small and Medium-sized Enterprise (SME) looking to grow your team, understanding how to utilise government funding is critical to maximising your return on investment.

This page explains the current Apprenticeship Levy system and prepares you for the upcoming Growth and Skills Levy reforms, ensuring you can plan your workforce development strategy with confidence.

At a Glance: Key Funding Changes for 2025/26

What's changing, when it's changing, and what employers need to plan for ahead of April 2026.

Growth & Skills Levy

The Apprenticeship Levy is evolving into the Growth and Skills Levy, offering more flexibility in how funds can be used for shorter training courses.

Level 7 Funding Changes

From 2026, public funding for most Level 7 (Master's level) apprenticeships will be withdrawn for learners aged 23+.

Exact eligibility is subject to final DfE confirmation.

Levy Expiry Reduction

From April 2026, unused levy funds will expire after 12 months (reduced from 24 months). Use it or lose it sooner.

Forward planning is essential to avoid lapsing funds.

10% Levy Top-Up Ending

Currently, levy funds receive a 10% government top-up. Under Growth & Skills Levy reforms, this is expected to end.

Funds may not stretch as far—plan accordingly.

Higher Co-Investment

From 2026, employer co-investment is expected to increase to 25% (up from 5%) once levy funds are exhausted.

Accurate forecasting is more critical than ever.

Levy Transfers Expanded

From April 2024, levy-paying employers can transfer up to 50% of annual funds to other organisations, such as supply-chain partners or SMEs.

Up from 25% previously.

LARGE EMPLOYERS

For Levy-Paying Employers (Paybill over £3 million)

What is the Apprenticeship Levy?

The Apprenticeship Levy is a tax on UK employers charged at 0.5% of your annual pay bill. It applies to all employers with a payroll over £3 million.

£15,000 Allowance

Every employer gets a £15,000 allowance each tax year to offset against the levy. This means you only pay the levy if your annual pay bill is over £3 million.

Who Pays?

  • Employers with an annual pay bill > £3m.
  • Levy is charged at 0.5% of the total pay bill.
  • Funds are accessed via the Digital Apprenticeship Service (DAS).
  • The government adds a 10% top-up to funds in your account.

Apprenticeship Levy Calculator

Enter your total annual UK payroll to estimate whether you pay the levy and what that could mean for apprenticeship funding.

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Managing Your DAS Account

Your Digital Apprenticeship Service (DAS) account is the essential portal for managing funding. You use it to:

We support employers from digital account setup to levy strategy and cohort planning.

  • Receive levy funds or reserve government co-investment.
  • Find and manage training providers.
  • Approve apprentice records and payment stops/starts.

Pro Tip:

Ensure your PAYE scheme is correctly linked during registration. A mismatch is the most common cause of funding delays.

Quick setup checklist

  1. Create your Apprenticeship Service account
  2. Confirm your organisation details
  3. Link your PAYE scheme
  4. Add/confirm account users (HR/Finance)
  5. Approve training provider and cohort details

Note for SMEs: Non-levy employers typically reserve government funding through the Apprenticeship Service — we can guide you through this step.

Strategic Spending & Levy Transfers

Upskill Existing Staff

Levy funds aren't just for new hires. Use them to train current employees in leadership, data, or technical skills.

Levy Transfers

Levy-paying employers can transfer up to 50% of their annual funds to other businesses (e.g., in their supply chain or local SMEs) to support apprenticeships.

Future-Proofing (April 2026+)

Look out for "modular learning" options under the new Growth and Skills Levy, allowing shorter, targeted training units.

Solveway specialises in digital, finance, AI and technology apprenticeships — priority areas as the Growth & Skills Levy evolves.

SME SUPPORT

For SMEs & Non-Levy Employers

Smaller employers who do not pay the levy (annual payroll under £3m) share the cost of training and assessing their apprentices with the government.

SME Co-Investment (95% / 5%)
95%

Government Contribution

The government pays 95% of the training costs. You just pay the remaining 5% directly to the training provider.

Eligible SMEs (100% funded)
100%

Fully Funded Learners

Some SMEs may pay 0% (fully funded training) when the apprentice is:

  • Aged 16–18
  • Aged 19–21 (for employers with fewer than 50 employees)
  • Aged 19–24 with an Education, Health and Care Plan (EHCP) or care experience

Additional Financial Support Employers Often Miss

Beyond training costs, you may be eligible for direct cash incentives and tax savings.

£1,000 Incentive

Employers receive £1,000 for each apprentice aged 16–18, or 19–24 with an EHCP or care experience. Paid in two instalments.

Level 2 Incentive

Up to £2,000 for recruiting a young apprentice on a Level 2 (“foundation”) apprenticeship. Part paid at start; balance upon progression.

NI Savings

Employers do not pay employer National Insurance contributions for apprentices under 25 (up to the upper earnings limit), reducing salary costs.

The Business Case

ROI Beyond the Balance Sheet

Why investing in apprenticeships is one of the smartest financial decisions for your business.

Staff Retention

92% of companies that invest in apprenticeships report a more motivated and satisfied workforce, leading to higher retention rates.

Reduced Recruitment Costs

Train talent in-house to fill specific skills gaps rather than paying high recruitment fees for senior external hires.

Productivity Boost

78% of employers reported improved productivity. Apprentices bring fresh ideas and current industry best practices.

Frequently Asked Questions

Can I use levy funds for existing employees?
Yes. As long as the apprenticeship provides new skills and requires significant learning (at least 12 months duration and meets the planned off-the-job training requirement), existing staff are eligible.
What happens if I run out of levy funds?
If you spend more than is in your levy pot, you simply switch to the co-investment model. The government will pay 95% of the additional costs, and you pay 5%. From 2026, the employer contribution is expected to increase to 25% once levy funds are exhausted.
Do levy funds still get the 10% government top-up?
Currently, yes. Levied employers receive a 10% government top-up on funds. However, under the new Growth & Skills Levy reforms, this top-up is expected to end, so employers should plan for reduced spending power.
Are Level 7 (Master's) apprenticeships still funded?
From 2026, public funding for most Level 7 apprenticeships will be withdrawn for learners aged 23+ (subject to final DfE confirmation). We advise booking discovery calls to plan for these changes.
Do funds expire?
Yes. Currently, funds expire 24 months after they enter your account. From April 2026, under the new Growth & Skills Levy proposals, this is expected to reduce to 12 months.
Can I use funds to pay apprentice wages?
No. Levy funds and government co-investment can ONLY be used for training and assessment costs. They cannot be used for wages, travel, or equipment.
What is the off-the-job training requirement?
Apprentices must spend at least 6 hours per week (for a full-time apprentice) on training/learning during paid hours. This isn't just 'classroom' time—it includes shadowing, mentoring, and practical training.

Ready to Maximise Your Funding?

Whether you have unspent levy funds or want to access 95% government funding, our team can help you build a strategy that delivers real ROI.