The apprenticeship levy: an employer’s guide

What is the apprenticeship levy?

The apprenticeship levy is a UK government policy designed to fund apprenticeship training. Employers with a pay bill of more than £3 million a year must pay the levy, set at 0.5% of their annual pay bill, minus a £15,000 allowance. Payments are made monthly through PAYE.

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.

How employers can use apprenticeship levy funds

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

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

If your business does not pay the apprenticeship levy, from 2026, employers will now contribute 25% towards further training costs. This was announced in the Autumn Budget of November 2025.

That said, through the Youth Guarantee, training for apprentices aged 16-24 will now be fully funded, removing a major financial barrier to developing early-career talent

The threshold has been extended from under-22, to under 25 years of age. This means 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 employer. This is known as an apprenticeship levy transfer.

• Large employers can support their supply chain, local SMEs, or care sector partners by transferring unused funds
• Receiving employers benefit from 100% of training and assessment costs being covered (up to the funding band maximum)
• Transfers are arranged through the Apprenticeship Service account, 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:

• Support smaller care homes and community providers with training costs
• Increase the supply of skilled care workers across the sector
• Reduce reliance on agency staff by creating sustainable career pathways

Key steps for employers

Levy-paying employers:

• Register for the Apprenticeship Service account
• Identify apprenticeship standards aligned to your business needs
• Choose an approved training provider and End-Point Assessment Organisation
• Add apprentices to your account so training payments can flow monthly
• Monitor fund expiry dates and plan starts accordingly

Making a transfer:

• Log into your Apprenticeship Service account
• Set up a transfer pledge by location, sector, or role, or connect directly with a partner business via the team at The Childcare Company
• 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

Why engage now?

• Funds expire after 24 months. Don’t lose your contributions
• Transfers make an impact by strengthening the wider care sector
• Government co-funding means apprenticeships remain affordable even for non-levy payers
• Need help? Book a call with one of our team who will walk you through the process and answer any questions

Book a call with one of our specialists and we’ll show you how to make the most of your levy.

Not a levy-payer? We’ll help you access funding and even explore levy transfers available in your sector.

Ready to future-proof your workforce? Reach out to the team at The Childcare Company today. Book a call today.