Is Your Apprenticeship Levy Going to Waste? Here’s How to Make It Work for Your Business
If your business has an annual pay bill over £3 million, you're likely paying into the Apprenticeship Levy. But are you getting value from it, or just watching it disappear?
Since it launched in 2017, the Apprenticeship Levy has helped fund hundreds of thousands of apprenticeships across the UK. Yet, a staggering amount of this money — billions of pounds — has gone unused, quietly expiring in employer accounts each month. That’s money that could have been spent upskilling your workforce, building future talent pipelines, and strengthening your supply chain.
Here’s what employers need to know about the levy and how to make it work in your favour.
What is the Apprenticeship Levy?
The Apprenticeship Levy is a UK government initiative designed to fund high-quality apprenticeships. It applies to all UK employers with an annual wage bill of over £3 million.
You pay 0.5% of your total payroll each month via PAYE.
A £15,000 allowance offsets this, so you only pay on the amount above that threshold.
The government adds a 10% top-up to your levy pot each month, adding extra value to your contribution.
Funds are held in a digital account for 24 months before expiring if unused.
This isn’t just a tax. It’s a dedicated training budget that can be reinvested into your organisation.
Who can use levy funds?
Levy funds can be used to cover 100% of apprenticeship training costs (up to the maximum funding band for each standard) for:
New hires of any age
Existing employees looking to upskill or retrain
Apprentices at all levels — from Level 2 (entry-level) to Level 7 (postgraduate)
This opens the door to creating future-fit teams without the usual training costs.
Not a levy-paying employer? You still benefit
Even if your organisation doesn’t meet the £3 million payroll threshold, you still get significant government support:
You pay just 5% of the apprenticeship cost. The government covers the remaining 95%.
For apprentices aged 16 to 18 (or 19 to 24 with an EHCP), you may receive additional incentives — like a £1,000 employer bonus.
You can receive levy transfers from larger organisations looking to support others in their sector or supply chain.
This makes apprenticeships more affordable and more strategic, than ever.
Common pitfalls: what employers get wrong
No plan means lost funds. Without a clear apprenticeship strategy, many organisations miss their window to use funds effectively.
Training misalignment. Not all apprenticeships are created equal. Choosing the wrong standard or provider can limit impact.
Low internal awareness. Many HR, L&D or line managers don’t even know there’s money available.
How to make the levy work for you
Audit your digital apprenticeship account - know what’s available and when funds expire.
Create a skills strategy - link apprenticeships to business needs, future roles or hard-to-fill positions.
Use levy transfers strategically - support suppliers, SMEs or charity partners through a transfer (up to 25% of your annual pot).
Partner with the right provider - work with an expert like The Colleges Partnership to design and deliver high-impact training.
Think beyond recruitment - use apprenticeships to develop leadership, digital, sustainability and operational skills in current staff.
How to make the levy work for you
Audit your digital apprenticeship account - know what’s available and when funds expire.
Create a skills strategy - link apprenticeships to business needs, future roles or hard-to-fill positions.
Use levy transfers strategically - support suppliers, SMEs or charity partners through a transfer (up to 25% of your annual pot).
Partner with the right provider - work with an expert like The Colleges Partnership to design and deliver high-impact training.
Think beyond recruitment - use apprenticeships to develop leadership, digital, sustainability and operational skills in current staff.
Ready to take control of your levy?
The Colleges Partnership works with employers to design flexible, high-quality apprenticeship programmes tailored to real business needs. From onboarding to End Point Assessment, we take care of the details so you can focus on results.
Get in touch to talk levy strategy or book a free apprenticeship audit. Or email us: enquiries@tcpartnership.ac.uk
For a full breakdown of how the Apprenticeship Levy works, visit the official GOV.UK guidance.