Apprenticeship Levy & Growth and Skills Levy Explained

The Apprenticeship Levy is now known as the Growth and Skills Levy. While the name has changed, the way the levy is funded and used remains largely the same. For clarity, this guide refers to both terms interchangeably.

The Growth and Skills Levy is a dedicated government tax that gives organisations the opportunity to reinvest it to close the skills gap, and strengthen internal capability by upskilling or reskilling their workforce.

Employers with a payroll bill over £3 million contribute 0.5% of their total payroll, with funds placed into a digital account. The money is reserved exclusively for approved training and must be invested within a set period.

The length of this period varies depending on when the funds were collected.

Apprenticeship Levy funding rules determine how employers can access and spend levy funds on approved training and development programmes. Employers can use levy funding only for eligible training delivered by approved providers, and they must use it within set timeframes before it expires.

Employers can use the Growth and Skills Levy, formerly known as the Apprenticeship Levy, to fund apprenticeship programmes that develop AI and data skills, exclusively through approved providers.

Understanding how to use the Apprenticeship Levy effectively helps organisations maximise return on investment while addressing critical skills gaps, resulting in time and money savings, reduced errors, and improved employee morale.

The transition from the Apprenticeships Levy to Growth and Skills Levy brings several structural updates that introduce a sharp "use-it-or-lose-it" pressure on large enterprises.

• 12-Month Fund Expiry: Previously, employers had 24 months to spend their accrued levy funds. That window has been cut to 12 months. Unspent funds return directly to the Treasury much faster, meaning proactive, continuous training planning is now non-negotiable. Funds added to your pot before the first of August will retain their 24-month expiry window.
• Removal of the 10% Government Top-Up: The historical 10% monthly bonus added by the government to your digital account has ended. Your training pot is exactly what you pay in.
• The 25% Co-Investment Rate: If your organisation exhausts its core levy pot, the cost share for additional training has risen. The government's co-investment coverage drops from 95% to 75%, meaning employers must cover 25% of the costs for extra training out-of-pocket.
• Management Funding Cuts: Funding for 16 traditional higher-level management standards (including the Level 3 Team Leader and Level 5 Operations Manager pathways) is being withdrawn for new starts.
• The support of under 25s: Under the new legislation, apprenticeship training costs are fully funded for individuals under 25, with SMEs paying nothing for training.