Apprenticeships and the Apprenticeship Levy

Apprenticeships offer a powerful and often overlooked pathway for businesses to grow internal skills, enhance organisational capability, and make a real impact. And with the right approach to funding especially via the Apprenticeship Levy they’re more accessible than many think.

The Apprenticeship Levy: What Is It?

The Apprenticeship Levy is a UK tax introduced in April 2017 that applies to employers with an annual pay bill exceeding £3 million. These organisations pay 0.5% of their total pay bill (after the £15,000 allowance) into a digital fund, which receives a 10% top-up from the government.

These funds are held in the employer’s Apprenticeship Service account and are available for 24 months before expiring.

What Can Levy Funds Be Used For?

Levy contributions can only be used to fund approved apprenticeship programmes.

Non-Levy-Paying Employers: How Funding Works

If your organisation doesn’t pay the Levy (pay bill under £3 million), you still benefit! The government typically co-invests up to 95% of apprenticeship training costs, with some circumstances (e.g., apprentices aged 16–21) eligible for full 100% funding up to the funding band maximum.

Funding Bands & Incentives

Apprenticeship standards are grouped into funding bands (from around £1,500 to £27,000), which represent the maximum funding available per apprentice. If training costs exceed the band, the employer covers the difference directly.

Recent updates include employer incentives up to £2,000 for eligible foundation apprenticeships, applicable to new starts from 1 August 2025.

Why Apprenticeships Are Worth It

Since 2020, over 1.6 million apprenticeship starts have taken place across sectors—from healthcare to digital and engineering—highlighting the scheme’s reach and relevance.

Key Benefits for Employers

• Cost-effective: Levy funds, co-investment support, and incentives reduce the financial burden
• Customisable: Choose apprenticeship types and levels that align with your organisational needs
• Future-ready: Apprenticeships offer hands-on, targeted training that builds internal competencies sustainably

Whether you’re a levy-paying organisation or not, the apprenticeship system is designed to support you:

• Levy-payers can utilise their digital fund (plus the government’s 10% top-up) for approved training
• Non-levy employers benefit from generous government co-investment, sometimes covering the full cost
• Foundation apprenticeships with new incentives kick in from August 2025
• Unused levy funds may be accessible via transfers or pledges—particularly helpful for SMEs

Ready to develop your workforce with apprenticeships?

Whether you’re looking to upskill existing staff or bring in fresh talent, our team at t2 group will guide you through every step—from choosing the right programme to maximising your Apprenticeship Levy or government funding.

Visit our Adult Care Apprenticeships and our Leadership and Management Apprenticeships to learn more.

Let’s turn your skills strategy into a success story.