Guide to the Apprenticeship Levy: Make the Most of Your Levy Funds

Written on: 19 May 2021

Written by: Megan Hussey



As your organisation grows and your annual wage bill hits the £3m threshold, you will begin making Apprenticeship Levy contributions. In this blog, we’ll take you through everything a new levy-paying organisation needs to know. We’ll cover how to calculate and access your levy funds, what levy funds can be used for, and how to maximise the opportunity and strengthen your return on investment with apprenticeships.

Why is the Apprenticeship Levy Important?

If you’ve recently started paying into the Apprenticeship Levy, it’s vital to have a plan in place for how you’ll use your freshly ringfenced funds.

Many large organisations are currently under-utilising their levy; between May 2020 and February 2021, over £1bn in levy contributions expired and were returned to the Treasury – resulting in many organisations losing control of their funds.

Creating a strategy for your apprenticeship levy spend is essential for preventing waste and capturing the benefits of affordable talent development.


The Apprenticeship Levy came into effect in 2017 as a way to encourage large employers to nurture their skilled workers, invest in new talent, and bridge emerging skills gaps. Your levy contributions grow into a ringfenced training fund, which can then be spent on apprenticeship training at all levels of your business.

Related content: what is the background behind the apprenticeship levy?

In April 2021, Government figures revealed that 57.4% of apprenticeship starts in 19/20 came from levy-paying organisations, and many employers have chosen to embrace the fund as a means to bring in new talent and provide additional training for their staff.

Shortly after the introduction of the apprenticeship levy Sophie Gray, Aviva’s UK Apprenticeship Lead, gave Baltic Apprenticeships an insight into the effect of the levy on their training strategy:

“The apprenticeship Levy has given us a fresh focus on building skills. In the past, we have done some great professional development, but the levy has definitely given us a renewed focus by identifying a ring-fenced learning and development budget on a scale that we’ve never really seen in the past. I’m very pleased that everyone at Aviva is encouraging of development, and therefore we’ve decided to use it rather than lose it.”

By viewing the Apprenticeship Levy in the way it was designed – as a protected budget for skills development, rather than a tax on large organisations – employers can begin to reap the benefits of this fund.

Creating an Apprenticeship Levy budget: How do i work out how much i need to pay?

The apprenticeship levy is payable monthly to HMRC and charged at a rate of 0.5% of your pay bill if you exceed an annual pay bill of £3m a year. The levy also applies if you are connected to other companies or charities for Employment Allowance and have a combined wage bill of £3 million. In addition to the money you’ve paid into the levy, you’ll also receive a 10% government top up to spend on apprenticeships.

You can use our handy levy calculator to work out the amount your organisation will pay each month. You’ll need to have a rough idea of your annual salary costs and percentage of staff that live in England.


Once you have the figures sorted, you can begin to plan how you’ll spend your Apprenticeship Levy.

Levy funds can only be used to pay for apprenticeship training and assessment costs. The Levy cannot be used to pay for related employment costs, such as wages, travel or equipment.

Apprenticeships are a fantastic way to hire future talent, but can also be used to develop current staff, from junior professionals all the way up to senior management.

Recruiting an apprentice with your Levy funds:

One way to utilise your levy funds is by recruiting a new apprentice to join your team. We operate in the tech sector and provide a range of Level 3 and 4 apprenticeship programmes in IT, Software Development, Digital Marketing, and Data Analysis.

Apprenticeships are an effective way to futureproof your workforce, bridging the digital skills gap by training your organisations next generation of tech talent.

Find out more: browse our digital and tech apprenticeship programmes

Train Existing Staff With your levy funds:

Your apprenticeship levy can also be used to enrol existing employees onto an apprenticeship. Our programmes offer a highly effective and affordable means of training at all levels of an organisation.

Apprenticeship standards are much more than just a qualification, they can be used as a comprehensive development plan to upskill members of your team who want to advance to senior positions or move into other areas of your organisation, rather than hiring for these positions externally.

Managing the Apprenticeship Levy: HOW DO I ACCESS MY FUNDS?

Your funds can be accessed through your apprenticeship service account. You can use this online service to view your available levy funds, manage your apprentices, offer a levy transfer, and pay your training provider.

The apprenticeship service account only displays funds available for employees based in England, as the levy is a devolved policy. If you have employees based elsewhere in the UK, these funds will be managed separately. After 24 months, your levy funds will start to expire on a monthly rolling basis, but with a little planning and vision, you’ll be able to build this amazing resource into your overall talent development strategy.

What Happens IF My Apprenticeship Levy Funds Run Out?

If you've already committed your apprenticeship levy funds, but would like to invest in more apprentices, you are free to do so. To fund extra apprenticeships, you'd need to follow the co-investment funding model that non-levy paying organisations use. With the co-investment model, employers pay 5% of the apprenticeship training costs, while the government covers the remaining 95%. 

For more advice and guidance on the Apprenticeship Levy, or to explore how apprenticeship training could fit into your organisation, please get in touch with our team of levy specialists.

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