Updated for the 1 August 2026 rules

The Growth and Skills Levy, explained

Q: Is the Growth and Skills Levy a new tax?

No. It is the Apprenticeship Levy renamed. The rate, allowance, threshold and collection method are unchanged. What changed is what the funds can be spent on and how long employers have to spend them.

Q: How much is the Growth and Skills Levy?

It is 0.5% of an employer's annual pay bill, less an annual allowance of £15,000. In effect it applies to employers with a pay bill above £3 million.

Q: Can existing employees use levy funding?

Yes, with no upper age limit. The requirement is that the training is materially new to the person and that they meet the eligibility criteria, not that they are a recent hire.

The Apprenticeship Levy was renamed the Growth and Skills Levy in April 2026, and the rules governing how employers spend it changed again on 1 August. This is what it is, what changed, and what it means for the money sitting in your account.

If you already paid the Apprenticeship Levy, you pay the Growth and Skills Levy. It is the same charge, collected the same way, at the same rate. What has changed is not how much you pay but what you can spend it on and how long you have to do it.

Rate: 0.5% of your annual pay bill
Allowance: £15,000 per year, offset against what you owe
Threshold: Employers with a pay bill above £3 million
Collected by: HMRC, monthly, through PAYE
Spent through: Your apprenticeship service account

Work out your own figure with the levy calculator, updated for the current rules.

What changed, and when

Four separate changes have landed inside twelve months. Taken together they tighten the window for spending levy funds considerably.

1 January 2026 Level 7 funding withdrawn for learners aged 22 and over
Master’s level apprenticeships, including senior leader and many professional qualifications, stopped being fundable through the levy for most learners.
April 2026 Renamed the Growth and Skills Levy
The rebrand accompanies a broader intention to fund shorter and more flexible training alongside full apprenticeships.
1 August 2026 Top-up removed, expiry halved, employer contribution raised
The three changes that matter most to how employers plan. Detail below.
1 September 2026 Sixteen apprenticeship standards close to new starters
Employers with plans built around a closing standard need an alternative before the cut-off.

The three changes on 1 August

Change	Before	From 1 August 2026
Government top-up on funds entering your account	10%	Removed
Time before unspent funds expire	24 months	12 months
Your contribution once your funds run out	5%	25%

The halved expiry window is the one to plan around. Funds that entered your account before the change keep their original 24 month window, and funds are drawn down oldest first, so the tightening arrives gradually rather than all at once. But money contributed from now has one year to be committed to training before it returns to the Treasury.

What this means in practice. An organisation that has historically reviewed its levy position annually now has a planning cycle shorter than its planning habit. If you look at this once a year, you will lose funds. There is no mechanism to reclaim expired money and no discretion to appeal it.

What the levy can be spent on

The levy is not a general training budget. It pays for apprenticeship training and assessment against approved standards, delivered by a provider on the register, and nothing else.

It does pay for

Training against an approved apprenticeship standard
End point assessment
Delivery by a registered training provider
Existing employees, at any age, not only new hires
Apprenticeship units, the new shorter programmes

It does not pay for

Wages, including during off-the-job training
Travel and subsistence
Equipment or software
Recruitment costs
Short courses that are not apprenticeships or units
Your own internal administration time

The most commonly missed item on the left is existing staff. An apprenticeship is a funded training programme rather than a hiring route or an age bracket, and for most levy paying employers, training people already in the business is both the better use of the money and the faster one to arrange.

Apprenticeship units

Alongside full apprenticeships, the Growth and Skills Levy introduces shorter modular programmes known as apprenticeship units, running from roughly 30 to 140 hours and aimed at employed learners aged 19 and over.

These exist to solve the commitment problem. A full apprenticeship is a fourteen month undertaking, and for some roles and some teams that is the wrong shape. Units allow a levy paying employer to fund targeted training without committing an employee to a full standard. The initial list of topics includes AI leadership.

If you do not pay the levy

Employers below the £3 million threshold do not contribute, but can still access apprenticeship funding. Government co-investment covers the majority of training costs, there is full government funding for younger apprentices at smaller employers, and you can receive transferred funds from a levy paying employer, which cover the cost in full.

Transferring levy funds

Levy paying employers can transfer a proportion of their annual funds to other employers. Transfers are commonly used within supply chains, with local partners, or with charities, and the receiving employer pays nothing towards the training.

With a twelve month expiry window, transfers become more useful rather than less. Funds transferred to another employer are funds spent rather than funds lost.

Turning levy funds into AI capability

The Level 4 AI and Automation Practitioner apprenticeship trains people already in your team, requires no degree and no coding, and is fully funded through your levy for eligible learners in England.

Common questions

Is the Growth and Skills Levy a new tax?

No. It is the Apprenticeship Levy renamed. The rate, the allowance, the threshold and the collection method are unchanged. What changed is what the funds can be spent on and how long you have to spend them.

How much is the Growth and Skills Levy?

0.5% of your annual pay bill, less an annual allowance of £15,000. In effect it applies to employers with a pay bill above £3 million, because 0.5% of £3 million is exactly £15,000.

How long do I have to spend my levy funds?

Twelve months for funds contributed from 1 August 2026, reduced from twenty four. Funds already in your account before that date keep the original window, and the oldest funds are always drawn down first.

What happens to unspent levy funds?

They expire and return to the Treasury. There is no rollover, no reclaim and no appeal.

Can existing employees use levy funding?

Yes, and there is no upper age limit. The requirement is that the training is materially new to the person and that they meet the eligibility criteria, not that they are a recent hire.

Does the levy apply across the whole UK?

Employers across the UK pay it, but apprenticeship funding is devolved. The rules described here, and the apprenticeship service account through which funds are spent, apply to England. Scotland, Wales and Northern Ireland run separate arrangements.

This page describes the rules in force from 1 August 2026. Levy rate, allowance and threshold are set by HM Revenue and Customs. Funding rules, standards and expiry arrangements are set by the Department for Education and Skills England, and are subject to change. Check the current position on gov.uk before making funding decisions.