How to Tap Into the Apprenticeship Levy to Upskill Your Team

Since its introduction in 2017, the Apprenticeship Levy has continued to offer a valuable opportunity for UK businesses to invest strategically in their workforce. This government initiative requires companies with an annual payroll exceeding £3 million to contribute to a levy fund. In return, these businesses gain access to a £15,000 Levy Allowance, further supplemented by a 10% government top-up, to finance apprenticeship programs.

Understanding the Apprenticeship Levy Framework in 2025

To effectively utilise the Levy, it's crucial to understand the associated funding rules. The Apprenticeship Funding Rules 2025 to 2026, effective from August 1, 2025, bring some key updates. These include specific eligibility criteria for apprentices, minimum wage requirements, and the fundamental concept of off-the-job training.

Previously, the "80-20" rule guided off-the-job training, but for new starts from August 1, 2025, the minimum off-the-job training hours will be a published figure on each apprenticeship standard. This figure can only be reduced if there is evidence of relevant prior learning, and the resulting program must not fall below 187 hours of evidenced delivery or 8 months in actual duration. This change aims to simplify the policy and offer increased delivery flexibility.

Debunking Apprenticeship Myths

It's important to dispel common misconceptions surrounding apprenticeships. They are not solely for young entrants into the workforce. In fact, apprenticeships cater to individuals of all ages and cover a diverse array of courses, including advanced and high-level programs. This flexibility allows businesses to tailor training to their specific needs, from foundational skills to specialised expertise.

The Apprenticeship Levy has been successful in boosting economic growth and productivity within the UK, with a report published by the Chartered Management Institute highlighting that apprentices who qualified in 2019 are anticipated to add an additional £7 billion to the economy by 2029. This is a 300% return on investment for these learners, based on the initial investment of £2 billion in their apprenticeship programmes. The CMI’s research also illustrates that the Levy is doing an excellent job of ensuring underrepresented groups are entering into higher-level roles as a result of their learning experiences, with 71% of management apprentices being from a background where neither parent studied at university.

Key Apprenticeship Funding Rules for Employers in 2025

When looking to train staff through apprenticeships, employers must be aware of the following funding rules:

• A thorough initial assessment must be conducted and documented. This assessment confirms learner eligibility (e.g., being over 16, a resident in England for at least 50% of working hours, and capable of completing the apprenticeship within the available time ), and ensures the programme is eligible for funding.

• Apprentices must not be receiving any other direct/indirect funding from the Department for Education for training that duplicates the apprenticeship. This includes other Further Education or Higher Education courses and other apprenticeships.

• The apprenticeship provider should run a skills scan to identify the apprentice's existing knowledge, skills, and behaviours. This ensures the training plan is tailored, and funds are not used for content already attained.

• For new starts from August 1, 2025, the minimum off-the-job training hours are published on each standard. This figure can be reduced for prior learning, but the program must still be at least 187 hours of evidenced delivery or 8 months in duration.

• Apprentices must be paid a lawful wage for the time they are in work and active learning. For apprentices aged 19 or over who have completed the first year of their apprenticeship, they must receive at least the correct national minimum wage for their age.

• A training plan must be developed and agreed upon by the employer, apprentice, and provider before any training is delivered. This plan outlines all relevant parties, the apprentice's job role, the apprenticeship standard, and details of the training to be delivered.

• The apprenticeship practical period must last for a minimum duration of 8 months for new starts from August 1, 2025.

Apprenticeship Levy: Frequently Asked Questions

As an apprenticeship provider, we're in a unique position to offer answers to some of the most common questions we've received from employers on the subject of apprenticeships, the Levy, and eligibility criteria, which are detailed below. Before we look at how to calculate apprenticeship levy funding, however, let's explore some other questions we've encountered.

Does This Only Apply to Young People?

One of the biggest misconceptions surrounding apprenticeships is that these benefits are only felt if you're hiring young or early-career apprentices. This is not the case—the Levy, and apprenticeships in general, are aimed to allow contributing companies to cover the cost of training courses by drawing from the Levy, with larger organisations helping to support the training needs of smaller companies through the 0.5% tax collected on wage bills over £3mn.

These apprenticeship programs are tailored at different levels, with many high-level apprenticeship standards granting undergraduate and postgraduate degrees from university institutions around the nation—meaning that they're an excellent way for senior staff to gain in-demand knowledge and skills in areas such as team leadership. Of course, junior staff benefit too.

What Courses Are Available Through the Levy?

Another common question we receive is whether the Levy can only be utilised for low-level courses, making it ineffective for organisations looking to upskill their senior staff or leadership teams. In reality, the funding is available to train people within your business at every level of seniority, from early-career salespeople to seasoned experts.

Whether it's new starters looking to build the basic skills for career success, managers aiming to better serve their teams, or executives looking to gain new skills to drive profitability, the Levy can fund their training. For example, apprenticeship standards such as the Level 4 Sales Executive are equivalent to a Higher National Certificate (HNC), while programs such as the Operational or Departmental Manager at Level 5 are equivalent to a Higher National Diploma (HND) or foundation degree.

How Long Can I Use Levy Funds For?

Levy funds, once collected into an employer's digital account, have a 24-month expiry period. Any unused funding cannot be carried over to the next 24-month block. 

Proactive planning and timely utilisation are key to maximising the benefits of the Levy. Levy-paying employers who anticipate not using all their funding can transfer a percentage of their levy funds (currently 50%) to other employers.

How Does My Business Access the Apprenticeship Levy?

To access your business's Levy funds, you must:

1. Create an account through the government portal.

2. Add your PAYE scheme and account office reference number.

3. Accept the employer agreement with the Secretary of State for Education.

Once these steps are completed, you'll be able to advertise apprenticeship vacancies, find training providers, select assessment organisations, and provide feedback on your staff's training.

How to Calculate Apprenticeship Levy Contributions

To determine your business's contributions and available funding, you can use our calculator. The government provides guidance on calculating contributions:

• For businesses starting to pay the Levy from the first month of the tax year, divide your annual allowance by 12 and subtract this figure from the 0.5% collected from your monthly wage bill.

• For organisations starting part-way through the tax year, calculate the accrued Levy allowance, divide it by 12, and multiply by the number of months passed since April.

It's crucial to retain records of any information used to calculate Levy contributions for at least three years after the end of the tax year they pertain to.

Use our Calculator

The Strategic Importance of Upskilling in 2025

Continuous training and development are no longer optional but essential, particularly with the increasing demand for digital skills. The Apprenticeship Levy provides a direct and funded pathway to address skills gaps within your organisation.

By investing in your existing talent, you can build loyalty, boost productivity, and ultimately enhance profitability. One of the major challenges for businesses is the need to discover staff with the skills necessary to drive business innovation, productivity, and profitability. In a tight economic climate, where candidates are less likely to move for a job not offering learning and development, apprenticeships offer a crucial solution.

Experts In Training and Apprenticeships

The Apprenticeship Levy presents a powerful tool for businesses to cultivate a skilled and adaptable workforce. By strategically investing in training and development through apprenticeships, companies can not only meet the immediate demands of the market and technological advancements but also secure a competitive edge for the future. Don't let this opportunity pass – tap into the Apprenticeship Levy and empower your team to reach its full potential.

If you're interested in learning more about how the training delivered on these programmes can prepare your team for the future of work, see our guide to driving innovation with digital apprenticeships for a closer look at how to use your Levy funding wisely or contact our team today.

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