Apprenticeship budgets in England: levy, transfers, and what employers actually pay
Apprenticeships can be one of the most cost-effective ways to build skills, strengthen retention, and plan for growth — but the funding can feel confusing at first glance. This guide breaks down the apprenticeship levy, levy transfers, and the key differences between levy-paying and non-levy-paying employers (including SMEs), so you can budget with confidence.
This article is general information, not financial advice. Funding rules can change and eligibility can vary by circumstance.
What sits inside an “apprenticeship budget”?
When employers talk about apprenticeship budgets, they usually mean two different things:
- Training and assessment costs (the funded element)
- Employment costs (your apprentice’s wages, plus time and support in the workplace)
In England, government funding (including levy funds and transfers) supports training and end-point assessment, but it doesn’t cover wages — so it’s useful to budget for both strands from the start. The GOV.UK funding rules explain what training funds can and can’t be used for.
The apprenticeship levy: who pays and what it’s for
The apprenticeship levy is paid by employers with an annual pay bill over £3 million, charged at 0.5%.
If you’re a levy-paying employer, your levy contributions (plus a government top-up added in your apprenticeship service account)* can be used to pay for approved apprenticeship training and assessment for your workforce. Managing this is done through the apprenticeship service.
In practice: levy is not an “extra project” — it’s an opportunity to put money you’re already paying into developing skills that directly support your business.
SMEs and non-levy-paying employers: what do you pay?
If your organisation does not pay the levy (which includes many SMEs), you can still access funded apprenticeships through co-investment.
For most new apprenticeship starts, non-levy employers pay 5% towards training and assessment costs, and the government pays 95%, up to the maximum allowed for that apprenticeship (a funding cap).
Non-levy employers typically manage this through the apprenticeship service, including reserving funding where required.
Levy transfers: a positive route to fully funded training
Levy transfers are one of the most employer-friendly parts of the system — especially for growing businesses.
What is a levy transfer?
Levy-paying employers can transfer a portion of their levy funds to other employers to pay for apprenticeship training and assessment. GOV.UK sets out how transferring works and why employers do it.
What does the receiving employer get?
Where a levy transfer is used, the transferred funds pay 100% of training and assessment costs (again, up to the funding cap for that apprenticeship) for the full duration of the apprenticeship.
For many SMEs, this can be a straightforward way to start an apprenticeship programme with minimal training-cost budget pressure — while still getting high-quality, structured development for a new or existing team member.
Simple budgeting scenarios (easy numbers)
To make it tangible, here are three simplified examples. (Exact prices vary by apprenticeship and are agreed with your training provider.)
Scenario 1: Levy-paying employer upskilling an existing employee
- You pay the levy and have funds in your apprenticeship service account
- Training and assessment are paid from your levy funds via the service
Budget focus: wages (already employed), line manager time, and planning cover during training.
Scenario 2: Non-levy SME recruiting a new apprentice (co-investment)
- Training price agreed: £10,000
- Employer contribution (5%): £500
- Government contribution (95%): £9,500
Budget focus: apprentice wages, supervision, and supporting training time.
Scenario 3: Non-levy SME using a levy transfer
- Training price agreed: £10,000
- Levy transfer covers training and assessment (up to the cap)
Budget focus: wages and workplace support — while training costs are covered through the transfer.
A quick checklist: what to plan for internally
Even when training is funded, successful apprenticeships work best when the workplace plan is clear:
- Wages and on-costs: apprentice salary, NI/pension where relevant
- Line manager time: coaching, reviews, and performance support
- 20% off-the-job training planning: how you’ll protect learning time in real workflows
- Recruitment/admin time: hiring, onboarding, and regular progress touchpoints
- Role fit and progression: what the apprentice will be doing at 3, 6, and 12 months
Want to use your levy (or access a transfer) with us?
If you’re levy-paying and want to make sure your funds are working harder — or you’re a non-levy employer interested in co-investment or levy transfer funding — we can help you understand your options and set up a simple plan.
Email our team: hello@hoet.co.uk
FAQs (for employers)
Do levy funds pay apprentice wages?
No — levy funds (and government funding) are used for training and assessment, not salary. The funding rules explain what’s included.
If we don’t pay the levy, can we still take on an apprentice?
Yes. Many employers use co-investment (typically 5% employer / 95% government) to fund training.
Can a levy transfer cover the whole apprenticeship?
Transferred funds can cover 100% of training and assessment costs (up to the funding cap) for the full apprenticeship duration.
*the Department for Education says that from the 2026/27 academic year it will begin to remove the additional 10% top-up (as part of Growth and Skills Levy changes).
(Find training and employment schemes for your business – The Growth and Skills Levy)
