The apprenticeship levy explained: an employer’s guide

Contents

Last reviewed: June 2026

What is the apprenticeship levy?

The apprenticeship levy is a UK government tax used to fund workforce training. Employers with a pay bill of more than £3 million a year must pay the levy, and employers not connected to other companies do not pay it if their pay bill is under £3 million. It is set at 0.5% of their annual pay bill, based on the total pay bill and total annual pay bill, minus the levy allowance and apprenticeship levy allowance. Payments are made monthly through PAYE alongside income tax and national insurance contributions, with reporting aligned to the financial year. It started on 6 April 2017.

Government guidance: Pay Apprenticeship Levy

These levy contributions go into a digital Apprenticeship Service account, which you can use to pay for approved apprenticeship training and End-Point Assessment in England.

Government guidance: Set up an Apprenticeship Service account

Unused funds expire after 24 months on a rolling basis; a key reason for businesses to plan how to spend their apprenticeship funding strategically, using tools such as an apprenticeship levy calculator to forecast contributions and spending.

How employers can use apprenticeship levy funds

Apprenticeship levy funding is available across sectors such as healthcare adultcare and pharmacy, and can be channelled into health and social care training courses such as apprenticeships that build capability across your organisation.

Levy funds can be spent on:

• Apprenticeship training with an approved provider
• The cost of the End-Point Assessment
• Training up to the maximum value of the funding band for each apprenticeship standard

These apprenticeship programmes can be tailored to business needs and used to address skills gaps. Employers can use levy funds for existing staff as well as new apprentices, and training is available to employees of all ages to help pay for apprenticeship training and related apprenticeship training costs.

They cannot be used for:

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

Government guidance: Apprenticeship funding rules for employers

Non-levy employers and co-investment

For non levy paying employers, from 2026, non levy paying businesses will contribute 25% towards further training costs as the co investment rate, with the government contribution meeting the remaining training cost. This was announced in the Autumn Budget of November 2025.

That said, through the Youth Guarantee, government incentives mean eligible employers hiring young apprentices aged 16-24 can access fully funded training, and small employers in this group will have 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 even more young people can access high-quality training at no cost to their employers.

What is an apprenticeship levy transfer?

If a business does not use all of its levy funds, it can transfer up to 50% of its unspent contributions to another no levy or levy employer. This is known as an apprenticeship levy transfer.

• Large employers can support their supply chain, local SMEs, or care sector partners by transferring unspent funds
• Receiving employers benefit from 100% of apprenticeship training and assessment costs being covered (up to the funding band maximum). Which helps fund apprenticeships for employers that cannot use levy funds directly
• Transfers are arranged through the Digital Apprenticeship Service account, also known as the DAS portal, either 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?

For care providers, levy transfers are a powerful way to:

At tend we work in adult social care and healthcare, so this is where transfers do the most good. For the sector, a transfer can:

• Fund 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 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. We make that match.

Key steps for employers

Levy-paying employers:

• Register for the Apprenticeship Service 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 End-Point Assessment Organisation
• Add apprentices to your account so training payments can flow monthly
• Monitor fund expiry dates, as levy funds expire, and plan apprenticeship starts before that happens

Making a transfer:

• Log into your Digital Apprenticeship Service account
• Set up a transfer pledge by location, sector, or role, or connect directly with a partner business via the team at tend
• Approve applications and confirm funding commitment

Receiving a transfer:

• Open an Apprenticeship Service account
• Apply to a public pledge or accept a direct transfer
• Access fully funded apprenticeship training and support with apprenticeship training costs through apprenticeship levy funding received via a transfer, which can cover approved training costs for a non levy paying employer

Care sector examples:

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

Why engage now?

• Funds expire after 24 months. 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 by strengthening the wider care sector
• 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 one of our team or explore how a health & social care apprenticeship provider can walk you through the process and answer any questions

Apprenticeship levy FAQs