Calling all LEVY paying Employers!

What is the Apprenticeship Levy?

The Apprenticeship Levy is a statutory tax paid by levy-paying employers to HMRC. Funds generated from these levy contributions are made available to employers through their Apprenticeship Service (DAS) account and can be used to fund approved apprenticeship training and assessment. 
 
From August 2026, funds entering an employer’s DAS account expire after 12 months if they are not used (levy funds expire on a rolling basis). Once expired, these funds cannot be reclaimed and are used to support apprenticeship funding across the wider skills system in England.
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Many levy-paying employers are unaware that the funds sitting in their Apprenticeship Service Account (DAS) have already been paid through the Apprenticeship Levy and can be used to develop both new and existing employees through apprenticeship training. 

What Can Levy Funds Be Used For?

Levy funds can be used to pay for approved apprenticeship training and assessment costs up to the maximum funding band allocated to an apprenticeship standard. However, not every apprenticeship will use the full funding band value.
 
Before enrolment, providers must carry out a prior learning assessment to identify any existing knowledge, skills, qualifications or experience that may reduce the amount of training required. Where prior learning is identified, the training content, programme duration and agreed apprenticeship price may be reduced accordingly.
 
For Example
An Information Communications Technician Level 3 apprenticeship has a maximum funding band of £15,000 [skillsengl…ion.gov.uk].
Following a prior learning assessment, a learner may already possess some of the required knowledge and skills. As a result:
  • The training plan may be reduced.
  • The programme duration may be shortened.
  • The agreed apprenticeship price may be reduced to, for example, £13,000.
In this scenario, only £13,000 would be drawn from the employer’s DAS account. The remaining £2,000 is not payable by anyone because the learner does not require that additional training.
 

What Happens If We Don’t Use Our Levy Funds?

Many employers assume they can accumulate levy funds indefinitely. This is no longer the case.
From August 2026:
  • Levy funds expire after 12 months if unused.
  • Expired funds cannot be reclaimed.
  • Unused funds are used to support apprenticeship funding across England [gov.uk].
This means that if your organisation is already contributing to the levy, apprenticeships can be an effective way to maximise the value of funds you have already paid.

Funding Rules for Levy-Paying Employers (From 1 August 2026)

ScenarioEmployer Contribution
Sufficient levy funds availableNo additional employer contribution required
Levy funds exhausted and apprentice aged 16-24£0 employer contribution. Government funds 100% of eligible training and assessment costs up to the funding band maximum
Levy funds exhausted and apprentice aged 25+Employer contributes 25%. Government contributes 75% of eligible training and assessment costs up to the funding band maximum

Key Takeaway

If you’re a levy-paying employer, apprenticeships are often funded using contributions your organisation has already paid through the Apprenticeship Levy. By understanding your DAS account balance, funding band values and the impact of prior learning assessments, you can make informed decisions and maximise the return on your levy investment.

How Does the Apprenticeship Funding Get Paid?

One of the most common questions employers ask is:
“Do we pay the training provider directly?”
 
In most cases, no.
 
If you are a levy-paying employer with sufficient funds available in your Apprenticeship Service (DAS) account, apprenticeship funding is paid automatically from your levy funds to the training provider on a monthly basis through the Government’s apprenticeship funding system.
 

Example: Information Communications Technician Level 3

Let’s assume:
  • Funding band maximum = £15,000
  • A prior learning assessment is completed
  • Existing knowledge, skills and experience reduce the amount of training required
  • The final agreed apprenticeship price is £13,000
In this scenario:
  1. The employer approves the apprenticeship in their DAS account.
  2. The agreed apprenticeship price of £13,000 is recorded.
  3. The funding is drawn from the employer’s levy funds over the duration of the apprenticeship.
  4. Payments are made by government systems directly to the training provider each month.
  5. The employer does not receive an invoice for the £13,000 because it is funded through their levy account. 
 

What If There Are Not Enough Levy Funds Available?

For apprenticeship starts from 1 August 2026:
ScenarioEmployer Contribution
Levy funds availableNo additional employer contribution required
Levy funds exhausted and apprentice aged 16-24£0 employer contribution. Government funds 100% of eligible training and assessment costs up to the funding band maximum
Levy funds exhausted and apprentice aged 25+Employer contributes 25%. Government contributes 75% of eligible training and assessment costs up to the funding band maximum

Key Message

Your levy funds are not paid to the training provider in one lump sum. Once the apprenticeship is approved in your DAS account, funding is drawn down over the duration of the programme and paid to the provider through the Government apprenticeship funding system, up to the agreed apprenticeship price.
 
Disclaimer: Funding rules are based on current Department for Education (DfE) guidance for apprenticeship starts from 1 August 2026. Funding eligibility, employer contributions and apprenticeship pricing are subject to individual learner circumstances, including prior learning assessments. Funding rules are subject to change. 
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How do I know if my business is a levy-paying employer?

Businesses pay the Apprenticeship Levy if their annual pay bill exceeds £3 million. Levy contributions are paid to HMRC and funds are then made available through the employer’s Apprenticeship Service (DAS) account to spend on apprenticeship training and assessment.

Yes.

Levy funds can be used to support both new recruits and existing employees, provided they are eligible for an apprenticeship and will gain significant new knowledge, skills and behaviours through the programme. Apprenticeships can be at a higher, equal or lower level than qualifications already held, provided the training content is materially different.

Before enrolment, a prior learning assessment is completed. This reviews the learner’s existing knowledge, skills, qualifications and experience.

If prior learning is identified, the training plan, programme duration and agreed apprenticeship price may be reduced. Only the agreed apprenticeship price is funded and drawn from the employer’s Apprenticeship Service account. 
Example:
  • ICT Level 3 Funding Band = £15,000
  • Prior Learning Adjustment = £2,000
  • Agreed Apprenticeship Price = £13,000
In this example, only £13,000 would be drawn from the employer’s DAS account.

From August 2026, levy funds expire after 12 months if they remain unspent (levy funds expire on a rolling basis).

Expired funds cannot be reclaimed by the employer and are used to support apprenticeship funding across the wider skills system in England. This means organisations may lose access to levy funds they have already paid if they are not utilised.

Many levy-paying organisations view apprenticeships as a strategic investment because:

✅ They’ve already paid the levy through payroll.
✅ Unused funds expire after 12 months (levy funds expire on a rolling basis).
✅ Levy funds can support both existing workforce development and new talent recruitment.
✅ Apprenticeship training can be tailored through prior learning assessments, ensuring employers only fund training that is genuinely required.
✅ Levy funds can be used across a wide range of apprenticeship standards, from Level 2 through to higher and degree-level apprenticeships.
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