The apprenticeship levy explained: an employer’s guide

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Funding for future development

Apprenticeships certainly are transformative. Not only do they elevate excellence through a mix of practical and structured learning, but they are also an incredibly cost-effective option for employers seeking professional development for their teams.

However, while most apprenticeships are government funded, there is one term that is often misunderstood, and that term is ‘levy’. The apprenticeship levy forms a fundamental factor in funding for professional training. For organisations, understanding how it works and how funds can be utilised can open a world of possibility for employers and their employees.

What is the apprenticeship levy? How does it work? What is the difference between levy payers and non-levy payers? Join tend now as we break down the details.

NB: All details below were last updated in June of 2026.

What is the apprenticeship levy?

The apprenticeship levy (also referred to as the growth and skills levy) was introduced on 6 April 2017. It is a UK government tax used to fund workforce training. Rather than being referred to as a tax, it is referred to as a fund, because the money forms a budget for the professional development of staff.

Which organisations pay the levy fund?

This depends on the size of the organisation; or, more specifically, how much in total they pay their employees annually.

For example:

• Larger businesses with a total pay bill of more than £3 million per yearmust pay the levy
• Smaller businesses do not pay the levy if their total annual pay bill is under £3 million

For levy-paying employers, contribution to the fund is currently set at 0.5% of the company’s annual pay bill. Payments into the levy are made monthly through PAYE, alongside income tax and national insurance contributions, with reporting aligned to the financial year.

For government guidance, visit: Pay Apprenticeship Levy

What account are levy funds paid into?

Levy contributions go into the organisation’s Digital Apprenticeship Service (DAS) account. Funds can then be used to pay for approved apprenticeship training and End-Point Assessment (EPA) in England.

For government guidance, visit: Set up an Apprenticeship Service account. You can also read the tend guide to using the Digital Apprenticeship Service (DAS) in our Employer Hub.

What happens to apprenticeship levy funds if they’re not used?

Unused apprenticeship levy funds expire after 24 months on a rolling basis (or 12 months from April 2026). This is a key reason for businesses to plan how to spend their apprenticeship funding strategically, using tools such as the tend apprenticeship levy calculator to forecast contributions and spending.

In what ways can employers use apprenticeship levy funds?

Apprenticeship levy funding is available across sectors, such as healthcare, adult care, and pharmacy. For example, healthcare providers may choose to channel apprenticeship levy funds into healthcare apprenticeship training with the power to build capacity and elevate quality across the organisation.

Levy funds can be spent on:

• Apprenticeship training with an approved provider (such as tend)
• The cost of the End-Point Assessment (EPA)
• Training up to the maximum value of the funding band for each apprenticeship standard (Understand more about this and other employer incentives linked to employing apprentices in our Employer Hub guide)

tend apprenticeship programmes can be tailored to the employer’s business needs as well as bridging skills gaps. Organisations can use apprenticeship levy funds for existing staff and new apprentices alike. In addition, apprenticeships and subsequent funding is available to employees of all ages. The point of the levy is to help pay for apprenticeship training and related apprenticeship training costs.

Apprenticeship levy funds cannot be used for:

• Apprentice wages or recruitment costs
• Travel, subsistence, or wider business overheads

This is incredibly important. Levy funds can only be used for staff apprenticeship costs and EPA fees.

For further government guidance, visit: Apprenticeship funding rules for employers

Non-levy employers and co-investment

So, what about smaller employers? Non levy-paying organisations, as of 2026, will contribute 25% towards further training costs per apprentice. This what’s referred to as the co-investment rate, because the UK government funds the remaining 75% of the training costs per apprentice (originally announced in the Autumn Budget of November 2025).

If 25% of course fees appears to be outside the scope of a smaller business’s budget, there are still ways to save. Through the Youth Guarantee, government incentives mean eligible employers hiring apprentices aged 16-24 can access fully-funded training, with smaller employers in this group having 100% of training costs covered.

The threshold has been extended from under 22 to under 25 years of age. This means more apprenticeship starts can be supported, as it enables more young people to access high quality training at no cost to their employers.

What is an apprenticeship levy transfer?

Here’s the good news for smaller employers. If a larger, levy-paying business does not use all of its levy funds within the given timeframe, it can transfer up to 50% of its unspent contributions to another company to support employers in smaller organisations. This is known as an apprenticeship levy transfer.

For example:

• Larger, levy-paying employers can support apprenticeships for organisations in their supply chain, local SMEs, or care sector partners by transferring unspent funds to help them train their own staff
• This enables smaller businesses who would ordinarily have to cover 25% of apprenticeship training and assessment costs, to cover 100% up to the funding band maximum. This helps employers without direct access to levy funds to benefit from the scheme
• Transfers are arranged through the Digital Apprenticeship Service (DAS) account and portal, by creating a public pledge, or agreeing a direct transfer with another business

Government guidance: Transfer your apprenticeship levy to another business

Why use levy transfers in the care sector?

tend specialises in apprenticeship training within works within healthcare and adult social care. Our teams have seen first hand that this is where levy transfers can do a tremendous amount of good.

For providers in the care sector, a levy transfer can:

• Fund employee training for small care homes and domiciliary providers who could never absorb the cost alone
• Build a pipeline of qualified care workers and registered managers, reducing reliance on expensive agency staff
• Strengthen NHS and social care partnerships by moving unused levy funds from large organisations to the smaller providers who need it most

A large levy-payer with funds about to expire, and a 20-bed care home that can’t afford training are a perfect match. Employers often experience administrative complexity in managing apprenticeship programmes and compliance. That’s why tend actively identifies matches like this, and provides levy transfer support, ensuring mutually-beneficial use of the apprenticeship levy.

Key steps for levy-paying employers

To begin with:

• Register for the DAS account as a levy paying employer
• Identify apprenticeship standards aligned to your business needs, including options for existing staff where appropriate
• Choose an approved training provider, such as tend, and an End-Point Assessment (EPA) organisation
• Add apprentices to your account so training payments can flow monthly
• Monitor levy fund expiry dates, and plan apprenticeship starts before that happens

Making a levy transfer:

• Employers access their DAS account via the portal
• Set up a transfer pledge to other businesses by location, sector, or role, or connect directly with a partner business via the team at tend
• Approve applications and confirm funding commitment

Key steps for non-levy-paying employers:

• Open an DAS account
• Apply to a public pledge or accept a direct transfer
• Access fully-funded apprenticeship training and support with professional development and assessment costs through levy funding received via a transfer, which can cover approved training costs

This is how all employers can benefit from the apprenticeship levy, big or small.

Care sector examples

• Upskill care assistants through Level 2 Adult Care Worker apprenticeships with funding for training also open across multiple care-related sectors, including healthcare and pharmacy
• Develop leaders and registered managers with Level 3 apprenticeship training or Level 5 Leader in Adult Care apprenticeship standards through programmes like the ones offered at tend, tailored to address sector-specific skills gaps in leadership and management
• Support NHS, social care and healthcare businesses by transferring unused levy funds to smaller providers and making full use of the Digital Apprenticeship Service (DAS) portal

Reasons to engage now

• Funds expire: Remember, levy-paying employers – don’t lose your contributions before the current window closes. From April 2026, the apprenticeship levy will be replaced by the growth and skills levy, under which levy funds will expire after 12 months.
• Transfers make an impact: Redistributed levy funds positively impact the wider care sector
• Makes training affordable for everyone: Government co-funding means apprenticeships remain affordable even for non-levy payers, and the new skills levy will also support shorter modular training formats for immediate skill needs

Need help? Book a call with the tend team. We can walk you through the process and answer any questions you may have.

Summary: Frequently asked questions

Ready to utilise the apprenticeship levy to upskill you teams? Reach out to the tend team today. Call 01753 596 004 or hit the button below.