A Quick Guide to the Apprenticeship Levy


What is the Apprenticeship Levy?

The Levy is designed to encourage businesses and charities to upskill current employees and train new recruits, to ensure their workforce has the necessary skills to see the organisation thrive.

Fully funded or part-funded training is available through the Apprenticeship Levy for a broad range of experience and ability levels from entry-level staff all the way through to the board room, with 600+ qualifications ranging from GCSE level to Masters Degrees.

Do I pay the Apprenticeship Levy?

The Levy is applied to businesses with an annual pay bill of £3 million or above (c. 100 employees). This is charged at 0.5% of your annual pay bill and collected automatically when you submit your PAYE. Your Levy pot can only be spent on apprenticeship training delivered by government-approved providers.

Businesses who do not pay the Levy make a 5% contribution to the training cost with the remaining 95% paid by the government. 

You can find out how to calculate your Levy contribution, exemptions and more detail here.

Who is eligible for apprenticeship training?

Most. All PAYE employees of businesses and charities registered in England are eligible to enrol in an apprenticeship. 

  • There is no age limit 
  • Apprenticeships are open to graduates
  • Existing employees do not have to take a reduction in salary to undertake apprenticeship training

How do you use the Apprenticeship Levy strategically?

The main thing you should avoid is investing in apprenticeship training just for the sake of spending your Levy pot. Employee development should be aligned with your business growth strategy. 

Think broadly - if you have an employee who has proven their potential in one area of the business, offering training in an additional area is a way to build a loyal workforce.

It has been proven that training entry-level talent not only benefits the apprentice, but their manager too. In effect, apprentices help you retain more senior staff as well. 

Apprenticeships allow your business to offer new opportunities to high-performing employees, fill skills gaps and reduce staff turnover. With this in mind, the Apprenticeship Levy should be used not just to bring in fresh talent, but also to upskill and develop existing members of staff.

Do Levy contributions expire?

Yes. The funds accumulate in your digital account on a monthly basis and must be used within 24 months. Use it or lose it!

Where do I find more information?

You can find more information about funding, eligibility, how to calculate your Levy contribution and more here.

If you're new to apprenticeships, the National Apprenticeship Service also recently released this helpful step-by-step guide to hiring an apprentice.


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