From April 2026 the Apprenticeship Levy is being replaced by the Growth and Skills Levy. This is an updated system designed to give employers more flexibility in how they invest in training and development.
Before we look at what’s changing, it’s helpful to start with a common question: what was the Apprenticeship Levy, and why was it introduced?
The Apprenticeship Levy, officially introduced in April 2017, is a government scheme designed to expand high-quality apprenticeship opportunities across the UK by levying funds from larger employers
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While the levy is doing a fantastic job in motivating business owners to discover and invest in fresh talent, many employers are reluctant to take on new apprentices and would prefer to invest their levy funds in training their existing staff.
The good news is this is possible, but it needs to be done correctly.
There is a common misconception that apprenticeships are only available for school leavers or in manual industries, but apprenticeships today are completely different to what they were in years gone by.
In essence, it works the same as any other apprenticeship.
Once enrolled, an apprentice would spend 80% of their time working as usual with 20% of their time spent on 'off the job' hours where they can learn, study for their qualification or get involved with different projects which allow them to develop the skills they are learning. This doesn't mean they will be off-site for 20% of their time, just that they will need to do something outside of their regular work routine so they can develop new skills and learn from others.
In short, levy funds must be spent on eligible training for your workforce (or transferred to support other employers) and end-point assessments conducted by an independent Assessment Organisation. Training must follow approved apprenticeship standards or short units delivered by registered providers listed on the Apprenticeship Provider and Assessment Register (APAR).
However, the important thing to note is the Apprenticeship Funding Rules state that the Levy cannot be spent on:
This is partly to prevent misuse of funds, but also to ensure that all apprenticeship courses associated with the levy fund adhere to the same standards and level of quality.
If your business meets the £3m payroll threshold and is required to contribute to the Levy, you will receive access to an Apprenticeship Services Account (ASA). This account will then be used to purchase and manage apprenticeship courses directly from the register of government approved programmes.
Whether you’re a large business managing your monthly levy funds or a smaller employer accessing government co-investment (with 100% government funding for apprentices aged 16–24 and a 5% contribution for staff aged 25+), the Apprenticeship Service account is your central management portal.
The Apprenticeship Service is an online portal designed to help employers choose approved apprenticeship standards and short units, select registered training providers, reserve government funding, and manage 50% levy transfers.
You will only find approved providers and assessment organisations listed on the government’s Apprenticeship Provider and Assessment Register (APAR) within the portal, and all government funding is managed through the service. This ensures all levy and co-investment funds are used appropriately on high-quality programmes that conform to modern occupational standards.
The setup process is straightforward. To create an account, you will need your Government Gateway login details, your organisation's PAYE scheme details, and your Companies House or Registered Charity number. You will then accept the official Employer Agreement. Once complete, you can log in to view your live levy balance, track rolling 12-month fund expiry dates, reserve non-levy funding, or manage levy transfer pledges.
Once your account is set up, select your organisation and start searching for an approved training provider on APAR. Your provider can add the learner and training details to the Individualised Learner Record (ILR), which will then appear in your account for you to review and approve before funding is released.
The most critical mistake an employer can make is spending levy funds simply to avoid losing them. Employee development must align directly with your business growth strategy, helping you fill critical skills gaps, improve staff retention, and futureproof your workforce
Under the Growth and Skills Levy, workforce planning is more flexible than ever, expanding beyond traditional 12-month-plus qualifications to include agile, short-term training option
Now we’re going to be focusing on whether or not it’s possible for your business to use levy funds to develop your own learning and development programmes.
Whether you are a large business managing your monthly levy funds or a smaller business accessing government co-investment, the same fundamental rules apply. You access the online Apprenticeship Service account, where you can select and partner with approved training providers listed on the Apprenticeship Provider and Assessment Register (APAR).
Alongside your training provider, an independent End-Point Assessment Organisation (EPAO) must be chosen from the APAR to conduct the final assessment.
While training providers deliver the on-programme training, the end-point assessment itself must be delivered independently to confirm occupational competence. Apprentices must complete this assessment to gain their qualification and for completion funding to be finalised.
In short, you can use levy funding to support your internal learning and development strategy, provided your training is delivered by a registered APAR provider and end-point assessments are carried out by independent, government-approved assessors.
The Growth and Skills Levy is designed to transform workforce development by giving employers greater flexibility to expand their teams, upskill existing staff, and build agile training plans.
Work with an APAR-registered training provider to shape eligible apprenticeship training around your employees’ roles and business priorities, while meeting the requirements of the approved standard.
Employers can also apply to become an employer-provider to deliver apprenticeship training directly to their own employees, subject to registration and funding requirements. Levy funding covers eligible apprenticeship delivery costs; it does not provide a general budget for internal learning and development.
The Growth and Skills Levy delivers financial, strategic and operational advantages for businesses of all sizes. Rather than viewing levy contributions solely as a payroll tax, employers can treat available funds as an investment in closing skills gaps, supporting retention and business growth.
Here are the primary benefits of the updated framework:
The Apprenticeship Levy is collected as a UK-wide tax by HMRC, but apprenticeship training and funding policy are devolved matters managed independently by the governments in England, Scotland, Wales and Northern Ireland.
This means that while the tax calculation rules (£3m payroll threshold, 0.5% levy rate and £15,000 allowance) are identical across all UK nations, access to apprenticeship funding depends on the relevant national arrangements.
The English Growth and Skills Levy funding arrangements including Apprenticeship Service accounts, short modular units, full funding for eligible under-25s and levy transfers generally apply to apprentices whose main place of work is in England, where they are expected to spend at least 50% of their working time. Exceptions and other eligibility requirements apply.
Scotland, Wales and Northern Ireland receive funding through the UK’s devolved funding arrangements, including the Barnett formula. Employers access apprenticeship training through their respective national systems rather than the English Apprenticeship Service portal:
If your organisation operates across multiple UK nations:
One of the most common questions people ask is whether or not there are any age restrictions for the levy.
There is no upper age limit for starting an apprenticeship. Apprenticeships can support both new recruits and existing employees at different stages of their careers, including those looking to retrain or develop new skills later in life. However, age restrictions apply to government funding for certain programmes, including Level 7 apprenticeships.
To encourage employers to recruit and develop young workers, the funding framework provides enhanced financial support for learners aged under 25:
Government funding restricts access to certain apprenticeships based on age:
Employers who contribute to the Growth and Skills Levy naturally want to make the most of their investment, whether by recruiting new talent or developing existing staff.
What some employers may not realise is how effectively levy funding can support their graduate recruitment schemes. Having a university degree does not prevent someone from undertaking an apprenticeship. Employers can use eligible programmes to help new graduates develop practical workplace skills or support existing degree-holders moving into different roles.
The apprenticeship must provide significant new skills, rather than repeat what the employee already knows . Your training provider will review their qualifications and experience before they start, tailoring the training and adjusting its cost and duration where appropriate.
Graduates can undertake an eligible apprenticeship at a lower, equivalent or higher level than their existing qualification. However, for Level 7 apprenticeships starting from 1 January 2026, government funding is restricted to learners aged 16–21, or 22–24 who are care leavers or have an Education, Health and Care plan.
For non-levy employers, eligible graduates aged under 25 can benefit from fully funded apprenticeship training and assessment, up to the funding band maximum. Employers recruiting eligible new graduate apprentices from 1 October 2026 may also qualify for the £2,000 hiring payment.
This approach gives graduates the opportunity to build job-specific skills while contributing to your business, helping you shape their development around the role and your organisation’s needs.
Yes, employers have significant control over how and with whom they spend their levy funds. Whether you are deploying your own account balance or transferring unused funds to another business, you can select your training partners and shape your training strategy.
We're often asked, “Can we choose who we spend the Growth and Skills Levy with?” The answer is generally yes, but there are a few rules to bear in mind.
Choosing who to train: You can use funding for eligible new recruits and existing employees, whether they are school or college leavers, graduates or experienced staff. There is no general upper age limit, but some programmes have specific funding restrictions, including Level 7 apprenticeships. The training must develop significant new skills, and the employee must meet the relevant eligibility requirements.
Selecting your provider: You can choose an approved main training provider listed on the government’s Apprenticeship Provider and Assessment Register (APAR). Your provider will work with you to select an approved assessment organisation where required.
Transferring levy funds: Levy-paying employers can transfer funds to other businesses, within their 50% annual transfer allowance. This can support supply chain partners or other employers; the businesses do not have to be connected. Both parties must agree which apprenticeships or approved units the transfer will fund, with transferred funds covering 100% of eligible training and assessment costs, up to the applicable funding limit. The receiving employer retains the choice of training provider and assessment organisation.
There’s a common misconception that apprenticeships are only for school leavers or younger people who don’t want to go to university. In fact, apprenticeship funding can support new recruits and existing employees at different stages of their careers, including university graduates.
There is no general upper age limit for starting an apprenticeship. However, the programme must develop significant new skills, and some apprenticeships have specific funding restrictions. For Level 7 starts from 1 January 2026, government funding is limited to learners aged 16–21, or 22–24 who are care leavers or have an Education, Health and Care plan.
The government provides additional financial support to encourage employers to recruit and develop young apprentices.
Employers can receive an extra £1,000 payment for an apprentice aged 16–18, or aged 19–24 who is a care leaver or has an Education, Health and Care plan.
For non-levy employers, eligible apprentices aged 16–24 have their training and assessment costs fully funded, up to the funding band maximum. This also applies to levy-paying employers whose account funds have run out.
Eligible non-levy employers recruiting new apprentices aged 16–24 with training start dates from 1 October 2026 can also receive up to £2,000 in hiring payments, subject to the payment conditions.
Some larger businesses may be unsure how to use their levy funds when they don’t want to expand their payroll by hiring new staff.
In this scenario, upskilling existing employees can help prepare people for promotion, support a change of role or strengthen skills within the team. An eligible apprenticeship can help employees develop practical skills and apply them directly in the workplace.
Your training provider will assess each employee’s existing knowledge and experience to identify a suitable programme that delivers new learning. Approved short apprenticeship units can also provide targeted training for existing employees aged 19 and over where an available unit matches their skills needs.
