Apprenticeship Levy Transfers 2026: How to Share Unspent Funds

What is the Apprenticeship Levy?

The Apprenticeship Levy has applied since April 2017 to UK employers with an annual pay bill above £3 million. It requires those employers to pay 0.5% of their total annual pay bill into a digital apprenticeship service account, collected monthly through PAYE alongside Income Tax and National Insurance.

Employers get an annual £15,000 allowance to offset against the levy charge, which in effect means the levy only becomes a net cost once your pay bill exceeds £3 million (since 0.5% of £3 million is £15,000 — exactly cancelling out the allowance at that threshold).

Why unused funds are a problem

Levy funds sit in an employer's digital apprenticeship service account and can only be used to pay for apprenticeship training and assessment costs — not wages, equipment, or other business costs. Many employers, particularly those without a strong pipeline of apprentice recruitment, end up accumulating funds they simply don't use.

This "use it or lose it" structure is precisely why the government introduced the ability to transfer funds to other employers, rather than simply letting large employers' unused levy contributions disappear.

How levy fund transfers work

Since 2021, employers have been able to transfer up to 50% of the annual value of funds entering their apprenticeship service account to other employers. This is a significant proportion — designed to give levy-payers real flexibility to support apprenticeship training beyond their own organisation.

Who can receive transferred funds?

• Smaller employers in your supply chain, who may not pay the levy themselves (typically businesses with a pay bill under £3 million).
• Other organisations you choose to support, including those with no pre-existing commercial relationship, subject to your own internal decision-making about who to prioritise.
• Local employers, charities, or organisations you have a strategic relationship with — many large levy-payers run structured transfer programmes specifically targeting local SMEs or their supplier base.

What can transferred funds be used for?

Transferred funds are restricted to:

• Apprenticeship training costs (the cost of the training provider) for new apprentices starting after the transfer is agreed.
• End-point assessment costs for those apprentices.

They cannot be used to pay apprentice wages, cover the costs of apprentices who started before the transfer arrangement, or fund anything other than training and assessment.

Step-by-step: setting up a transfer

1. Identify a receiving employer — often a supply-chain partner, a local business, or an organisation your company wants to support.
2. The receiving employer sets up (or already has) an apprenticeship service account.
3. Agree the apprenticeship standard to be funded — the transfer is tied to a specific apprenticeship, not a general cash gift.
4. The sending employer initiates the transfer through their apprenticeship service account, specifying the receiving employer's details and the funding amount.
5. The receiving employer accepts the transfer in their own account, and the agreed funds become available to pay for that apprentice's training and assessment as it's delivered.

Why this matters for SMEs

For smaller businesses that don't pay the levy, receiving transferred funds can be transformative:

• It removes or substantially reduces the cost barrier to taking on an apprentice, since normally non-levy employers must co-invest a percentage of training costs themselves (with government funding the rest, up to a funding band maximum).
• It can enable SMEs to access higher-value apprenticeship standards (e.g. technical or specialist qualifications) that might otherwise be unaffordable.
• It strengthens relationships within a supply chain, as large levy-paying employers often prioritise transfers to businesses they already work with, building skills capacity across their supplier network.

Practical tips for levy-paying employers

1. Monitor your digital account regularly to see how much is due to expire and when — funds expire on a rolling 24-month basis from when they entered the account, not a single annual date.
2. Build a transfer pipeline in advance — identifying potential recipients takes time, so don't wait until funds are close to expiry to start the conversation.
3. Prioritise strategic relationships — many employers use transfers to strengthen ties with key suppliers, local skills initiatives, or community organisations, turning a "use it or lose it" cost into a reputational and relationship benefit.
4. Combine with your own workforce planning — transferring funds doesn't have to mean you're not also using levy funds for your own apprentices; most employers do both.

Summary

The Apprenticeship Levy's 24-month expiry window means unspent funds are a genuine "use it or lose it" cost for many employers. The ability to transfer up to 50% of incoming funds to other businesses — particularly SMEs in your supply chain — turns what would otherwise be wasted expenditure into a practical way to build skills capacity beyond your own organisation, while still meeting your own apprenticeship training needs.