How do apprenticeships work?

Woman presenting to a group of people sat at a table

How do apprenticeships work?

Funded via the Growth and Skills Apprenticeship Levy: Maximising training investment

Levy Paying Employers

Employers who pay the Apprenticeship Levy can use levy funds to pay the full apprenticeship training cost. Where insufficient funds are not available, they can utilise the Government’s co-investment option.

Unused levy funds can be transferred to smaller businesses at the organisation’s discretion, fostering collaboration and expanding apprenticeship opportunities; however, unspent funds are reclaimed by the Government after 24 months

Non-Levy Employers

Non-levy employers receive government funding towards apprenticeship training and assessment costs, subject to the apprentice and apprenticeship meeting the relevant eligibility and funding rules.

For apprentices aged 25 and over, employers contribute just 5% of the apprenticeship training and assessment costs, with the government funding the remaining 95%.

For eligible apprentices aged 16–24, non-levy employers will receive 100% government funding, meaning there will be no employer contribution towards training and assessment costs.

Additional Financial Incentives

From October 2026, eligible non-levy employers may also receive an incentive payment of up to £2,000 when recruiting a new apprentice aged 16–24, subject to current government eligibility and funding rules. For the latest funding guidance, visit the University of �鶹ֱ�� website.

Growth and Skills Apprenticeship Levy

The Growth & Skills Apprenticeship Levy is a UK Government initiative introduced in April 2017 to encourage employers to invest in apprenticeship training. It applies to all employers with an annual wage bill of over £3 million, who are required to contribute 0.5% of their payroll into a dedicated apprenticeship fund. This fund can then be used to pay the cost of apprenticeship training and assessment for new recruits or existing employees. This fund is managed through an online Apprenticeship Service account, giving employers control over how and where their funds are spent.

For employers who do not meet the £3 million payroll threshold, the government offers generous co-investment funding. In this arrangement, non levy paying employers can also benefit, and depending on the age of the employee, will either receive full funding, or 95% of the training and assessment costs.

This ensures that businesses of all sizes can access high-quality apprenticeship programmes without facing significant financial barriers. Additionally, the levy encourages larger employers to collaborate with smaller organisations by transferring their unused levy funds to support apprenticeships in other businesses.

The levy system is designed to create a sustainable framework for workforce development, addressing skill shortages and improving productivity across industries. For employers, it represents an opportunity to maximise their investment in employee training. By using the apprenticeship levy effectively, businesses can upskill their workforce while also contributing to the long-term growth of the UK economy.