Apprenticeship Levy UK 2026: Who Pays and How to Access Your Funds

The Apprenticeship Levy was introduced in April 2017 to fund employer-led apprenticeship training in England. If your annual payroll exceeds GBP 3 million, you pay the levy -- and you have a Digital Apprenticeship Service (DAS) account where those funds accumulate. Many employers pay into the levy without fully drawing it down. This guide explains how it works, who pays, and how to access the money before it expires.

Who Pays the Apprenticeship Levy?

The levy applies to all UK employers with an annual pay bill above GBP 3 million. "Pay bill" means total employee earnings subject to Class 1 secondary (employer) National Insurance contributions -- essentially all wages, salaries and bonuses. Benefits in kind are generally excluded.

The levy rate is 0.5% of the portion of your pay bill above GBP 3 million. Each employer also receives a GBP 15,000 annual allowance which effectively acts as a zero-levy threshold on the first GBP 3 million of pay bill.

Calculation example:

Employer with GBP 5 million pay bill:

• Excess above GBP 3m: GBP 2,000,000
• Levy at 0.5%: GBP 10,000 per year = GBP 833.33/month

The levy is reported and paid monthly through PAYE via Real Time Information (RTI) submissions, alongside PAYE and employer NI.

The Digital Apprenticeship Service Account

Levy-paying employers have a DAS account at apprenticeships.education.gov.uk. Each month, your levy payment is credited to this account with a 10% government top-up. So every GBP 1 you pay in becomes GBP 1.10 available to spend on apprenticeship training.

This top-up is one of the scheme's most underutilised features. Employers who do not spend their levy are forgoing a guaranteed 10% uplift on their training budget.

The 18-Month Expiry Rule

Funds in a DAS account that have not been spent within 18 months of entering the account are automatically forfeited back to HMRC. This is a significant deadline. Large employers who are not actively recruiting apprentices can lose substantial sums.

To avoid expiry, levy-paying employers can:

1. Recruit more apprentices -- the most direct use of funds
2. Transfer funds to smaller employers -- levy payers can transfer up to 50% of their annual levy funds to other businesses in their supply chain or sector, who can then use the funds to pay for apprenticeship training. The receiving business does not need to be a levy payer
3. Use funds for existing employees -- you can put existing employees through apprenticeship standards (not just new recruits), including upskilling for degree-level apprenticeships

What Can Levy Funds Be Used For?

Levy funds can only be used for approved apprenticeship training and assessment delivered by providers on the Register of Apprenticeship Training Providers (RoATP). Eligible costs include:

• Training provided by an approved training provider
• End-point assessment costs (conducted by an approved End-Point Assessment Organisation)

Levy funds cannot be used for:

• Apprentice wages (these remain the employer's cost)
• Travel and subsistence
• Managerial costs of running the programme
• Redundancy payments
• Tools, equipment or uniforms

Non-Levy Employers: How to Access Funding

Employers with a pay bill below GBP 3 million do not pay the levy and do not have a DAS account. However, they can still access government co-investment funding for apprenticeship training:

• The employer pays 5% of the agreed training cost
• The government pays the remaining 95% (funded from unspent levy transfers and central funding)

This 5% contribution is capped at the maximum funding band for each apprenticeship standard.

Apprenticeship Standards and Funding Bands

Every apprenticeship standard has a maximum government funding band, ranging from GBP 1,500 to GBP 27,000 per apprentice. These bands cap the amount of levy funds (or government co-investment) that can be spent on training and assessment for a given standard.

For example, a Level 3 Business Administrator apprenticeship might have a maximum funding band of GBP 5,000. If your provider charges GBP 4,500, your levy account is debited GBP 4,500. If the provider charges GBP 6,000, you can only use GBP 5,000 from the levy -- the remaining GBP 1,000 must be paid directly by the employer.

Employer NI Exemption for Apprentices Under 25

As an additional incentive, employers do not pay employer Class 1 NI on wages paid to apprentices under 25 years old. Given that the standard employer NI rate is 15% above the secondary threshold of GBP 5,000, this represents a meaningful saving for employers taking on young apprentices.

For a 23-year-old apprentice earning the National Living Wage of GBP 12.71/hour (approximately GBP 26,436 per year full-time):

• NI-able earnings: GBP 26,436 minus GBP 5,000 = GBP 21,436
• Employer NI at 15%: GBP 3,215 -- entirely saved for qualifying apprentices under 25

Levy Transfers: Supporting Your Supply Chain

If you are a levy-paying employer with unspent funds, the transfer mechanism lets you direct up to 50% of your annual levy funds to smaller businesses. This is particularly valuable in sectors with complex supply chains -- construction, manufacturing, retail, hospitality -- where large anchor businesses can support apprenticeship training across their suppliers.

The transfer is made through the DAS, and the receiving business uses the funds exactly as if they were levy funds in their own account (with the same rules, provider requirements and funding band limits).

Monitoring Your Account

Levy-paying employers should log into their DAS account regularly to:

• Check the balance and funds at risk of expiry
• Review approved training providers in their sector
• Initiate transfers if balances are building up unused
• Track apprentice progress and payments to providers

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Use the CalcHub Apprenticeship Levy Calculator to calculate your annual levy liability and estimate the training budget available in your DAS account.