The Growth and Skills Levy Products
Apprenticeships
An apprenticeship is a real job that enables individuals to earn while they learn, gaining valuable knowledge, skills and behaviours tailored to a specific job role.
As an employer, hiring an apprentice allows you to invest in the future by bringing in talent that fits your business needs. Apprentices, like any other employees, have a contract with you.
Foundation apprenticeships
Foundation apprenticeships offer:
- Opportunities for young people: they are paid jobs with structured training in an entry level occupation (at Level 2) designed for young people at the start of their career.
- Pathway to progression: these apprenticeships offer a clear progression route, enabling individuals to gain relevant employability skills and experience that can lead to more specific or advanced apprenticeships. This structured pathway supports long-term career development and growth.
The first foundation apprenticeships went live on 1 August 2025 in construction and the built environment, engineering and manufacturing, digital and health and social care.
The available standards are published on Skills England’s website.
Find out more about eligibility and incentives in the funding rules.
Short courses
We are introducing short courses in England, funded through the Growth and Skills Levy. They will support Industrial Strategy sectors such as digital, advanced AI (Artificial Intelligence) and engineering, with starts from April 2026.
We will work with Skills England to determine the courses which will be prioritised in the first wave of rollout and subsequent waves, and how those sit alongside apprenticeships and training routes.
We will also work with Skills England to introduce these short courses and consider how to prioritise investment across the programme.
More information on short courses will be published later this year.
Flexibilities the Growth and Skills Levy offers
English and maths requirements
All new and existing adult apprentices, who are aged 19 and over at the start of their apprenticeship training, are no longer required to hold or achieve English and maths qualifications to pass their apprenticeship.
Instead, apprentices will demonstrate their English and maths skills by using them in real work tasks as part of their apprenticeship.
Apprentices who are aged 16 to 18 at the start of their training, are still required to achieve English and maths qualifications to support their career progression.
Funding will continue to be available for English and maths qualifications for all apprentices, including those aged 19 and over, where the employer agrees this should be part of their apprenticeship.
Minimum duration
From 1 August 2025, the minimum duration of an apprenticeship has been reduced to 8 months.
This change means apprentices will be able to achieve occupational competence more quickly where that makes sense, for example, because they have significant prior learning or to better align training with the industry.
All sectors will be able to make use of this new flexibility where it is appropriate for the role or the apprentice.
Working with Skills England and industry innovators, we are changing the typical duration of some standards to below 12 months, to reflect where competence will normally be delivered more quickly in future.
Find out which apprenticeships will have a shorter duration.
Other changes
Assessment model changes
The assessment process is being streamlined to enable more design and delivery flexibility so that:
- assessments are more proportionate to the competency being tested and removes any duplication
- assessment plans can be designed to allow assessments to take place on the programme
- training providers will be able to deliver elements of the assessment, end-point Assessment Organisations (EPAOs) will continue to shape the assessment and ensure the validity of outcomes
These changes will apply to all apprenticeships, at all levels. Existing assessment plans are being rewritten on a standard-by-standard basis to reflect these changes, with foundation apprenticeships already having been developed in line with the new assessment plans.
Further details on implementation, including which assessment plans will be revised and when, will follow later this year.
Level 7 apprenticeships
The government is refocusing investment towards young people at the start of their working lives, rather than those already in work with higher levels of prior learning and qualifications.
From 1 January 2026:
- Only level 7 apprenticeships for young people aged 16-21, and under 25 for care leavers and those with an Education, Health and Care Plan (EHCP) at the start of their apprenticeship will be eligible for government funding. Those aged 22 and over will not be eligible.
- Any apprentice who started a level 7 apprenticeship before 1 January 2026 will continue to be funded through to completion.
How the apprenticeship levy works
The apprenticeship levy was introduced in 2017 to support employers to invest in high-quality apprenticeship training and to ensure sustainable funding for employers of all sizes.
UK employers with an annual pay bill of over £3 million pay the levy at 0.5% of their total pay bill.
Even though only the largest companies have to pay the levy, the money it raises helps pay for apprenticeship training for other businesses too, including small and medium-sized enterprises (SME).
Watch our video to find out more about how the apprenticeship budget works and how all employers access funding.
This video is 11:30 mintues long.
Video Transcript
Welcome to this video on how money raised from the apprenticeship levy is used to fund apprenticeships in employers of all sizes in England. We will explain how the apprenticeship budget in England is made up, what it is spent on, and how employers access these funds.
First of all, what is the apprenticeship levy?
The apprenticeship levy was introduced in 2017 to support employers to invest in high quality apprenticeship training and to ensure sustainable funding for employers of all sizes. Now let's look at which employers are eligible to pay the apprenticeship levy.
The apprenticeship levy is payable by all UK employers with an annual payable of over £3 million. In this video, we will refer to these employers as levy paying employers. Those who don't need to pay the levy, we will refer to as non-levy employers who are typically smaller employers.
For those employers with a pay bill over £3 million, the levy is charged at 0.5% of an employer's annual total pay bill. His Majesty's Revenue and Customs, HMRC, is responsible for collecting the levy on behalf of the government. Employers pay the levy to HMRC on a monthly basis via the PAYE process.
So, we've heard how eligible employers pay the apprenticeship levy. Now, let's look at how the apprenticeship budget is set. The funding for apprenticeship training and assessment costs comes from the annual apprenticeship budget agreed at spending reviews.
The English budget is managed by the Department for Education DfE. This budget is set in advance by His Majesty's Treasury HMT. This means that investment will remain the same even if levy receipts fall. Although linked, this budget is distinct from the total levy receipts and the funds in employer apprenticeship service accounts.
Whereas the apprenticeship budget covers the financial year, the notional funding available in employer apprenticeship service accounts is available for 24 months before it expires. Skills policy is devolved to the four nations of England, Ireland, Scotland and Wales and Treasury allocate funding to them to spend accordingly.
In total, this apprenticeship budget covers the spend drawn down by all levy paying employers as well as apprenticeship costs for those who do not pay the levy. Under this funding arrangement, while levy paying employers are able to use all their levy funds on apprenticeship training, the majority do not, allowing the government to fund from the apprenticeship budget training and assessment costs for non-levy paying employers who tend to be small and medium-sized enterprises.
So, as we've heard, the apprenticeship budget is set by Treasury.
Now, let's look at how the DfE uses the apprenticeship budget to support the cost of apprenticeship training and assessment in England.
The apprenticeship budget pays for all apprenticeship training costs for levy and non-levy paying organisations in England. This includes partial or full training and assessment costs for new and existing apprenticeships.
The cost of English and maths functional skills up to level two for eligible apprentices. The cost of additional payments, including 1,000 pounds to both the employer and the training provider for apprentices aged 16 to 18 and for apprentices aged 19 to 24 who have an education, health, and care plan or who have been in local authority care.
The cost of extra learning support for apprentices with learning difficulties or disabilities, plus DfE programme support costs. The cost of any additional payments such as English and maths or extra learning support are not deducted from or shown in the employer's apprenticeship service account.
They are managed separately by the DfE and deducted from the apprenticeship budget. The employer will only see the costs for apprenticeship training and assessment within their account. Now let's look at what the budget was spent on in the financial year 2023/24.
The total revised end of year apprenticeship budget for England in the financial year 2023/24 was £2,525 million. Of that total amount, 69.7% was used to support apprenticeship costs in levy paying employers. Whilst in the same year, 27.5% was used to support apprenticeship costs in non- levy paying employers who are usually small businesses.
DfE programme support costs accounted for 2% of the total budget and 0.6% was unspent at the end of the financial year and so was returned to the treasury. Unspent funds from the budget are not related to funds expiring from levy payers accounts.
Now let's look at how levy paying employers in England access funds to pay for the training and assessment costs of their apprentices.
In England, an employer must create an account with the apprenticeship service in order to access and manage funding to spend on apprenticeships. However, they are not obliged to open an apprenticeship service account if they do not want to access funds.
The notional funds in employer accounts are based on their apprenticeship levy contribution and should be considered as a credit that is available for each levy paying employer to pay for their apprentices training and assessment costs.
In parallel, the training provider receives payment for training delivered directly from the DfE's apprenticeship budget rather than from any actual funds held by each levy paying employer. Funds in an employer's account are reduced accordingly.
The value of the funds in each levy payer's account will depend on how many of their employees live in England and the proportion of their PAYE bill paid to those employees. This is often referred to as the English percentage.
These notional funds are made available to levy paying employers and include a 10% top up from the government. Funds accrue on a monthly basis in an employer's apprenticeship service account and employers can make use of their levy funds for up to 24 months before they expire on a rolling month by month basis.
Employers can use the funds in their apprenticeship service account to pay for their apprenticeship training and assessment costs. They can also transfer up to 50% of their funds to support apprenticeships in other businesses such as smaller employers, flexi job agencies, and charities to help meet local and sector specific needs.
Now, let's look at how non-levy paying employers access funds to pay for apprenticeship training and assessment.
Since April 2021, all non-levy paying employers arranging new apprenticeships have done so through the apprenticeship service. This has given them more control over their apprenticeship choices, the ability to reserve funds and to choose the provider that best meets their needs.
Non- levy paying employers or those that do not need to pay the apprenticeship levy, i.e. They do not have a total annual UK pay bill of more than 3 million pounds and are typically smaller and medium-sized employers. Employers who do not pay the levy can access funds either by reserving funds or by arranging a transfer from a levy paying employer.
To do either of these, the non- levy paying employer will need to set up an apprenticeship service account. Firstly, let's look at how a non-levy employer reserves apprenticeship funding. The employer reserves their funds via their apprenticeship service account.
These reservations will cover 95% of the apprenticeship training and assessment costs up to the funding band maximum and the employer will pay the remaining 5% directly to their training provider. However, the government will pay 100% of the training and assessment costs if an employer takes on an apprentice aged under 22 or aged between 22 and 24 with an education, health, and care plan or who is a care leaver.
Alternatively, a non-levy paying employer can apply for a transfer from a levy paying employer who has available funds to spend. Employers need an apprenticeship service account to apply for a transfer to fund an apprenticeship for their business.
Transferred funds are used to pay for 100% of the training and assessment costs of the apprenticeship up to the funding band maximum and they cover the cost of the whole duration of the apprenticeship. The cost of any additional payments such as English and maths or other additional payments are not included in the transfer costs.
They are managed separately by the DfE and deducted from the apprenticeship budget at source. To summarise, we have covered how the English apprenticeship budget is set and is distinct from the total levy income collected and the notional funds in employer apprenticeship service accounts, what costs are covered by apprenticeship budget, how these are proportioned and how little is returned to the treasury, as well as how employers access these funds to pay for their apprenticeship training and assessment. We hope you have found this video useful.
For more information on apprenticeships, please visit apprenticeships.gov.uk