Growth and Skills
Levy

The Growth and Skills Levy is a tax on UK employers that is used to fund apprenticeship training. Regardless of sector, all employers with a payroll of over £3 million per annum are required to pay the Growth and Skills Levy. These organisations pay 0.5% of their pay bill to fund the levy.

The Growth and Skills Levy is paid by all employers (including businesses, schools and multi-academy trusts) with an annual wage bill exceeding £3 million.

The Growth and Skills Levy is paid into a central Digital Apprenticeship Service (DAS) account at a rate of 0.5% of the total annual pay bill. Employers manage their levy funds through a DAS account dedicated to apprenticeship training expenditures. Growth and Skills Levy funds must be used within 24 months.

Growth and Skills Levy funds can only be used to pay for training apprentices to achieve qualifications as part of an approved apprenticeship training programme.

Apprenticeship training can only be delivered by an approved training provider. Growth and Skills Levy funds typically cover apprenticeship training costs, assessment costs, training provider fees, administration, certification and qualifications. Growth and Skills Levy funds can be used to upskill existing staff as well as training new apprentices.

The Growth and Skills Levy can only be used by employers in England, as the legislation differs across the devolved nations. This is why levy-funded apprenticeships must work at least 50% of their time within England. The amount of levy available is directly linked to the proportion of employees living in England.

All eligible employers pay the 0.5% Growth and Skills Levy amount at the end of every month. This is collected automatically by HMRC through the employer’s PAYE system.

The Growth and Skills Levy is calculated as 0.5% of an employer’s annual pay bill. However, each employer receives an annual allowance of £15,000 to offset against their levy payment. The amount an employer pays in the levy is their total pay bill multiplied by 0.5%, minus the £15,000 allowance.

Depending on how your school is run, the apprenticeship levy will work differently for different types of schools and multi-academy trusts. Schools and MATs employ lots of different roles, and numerous apprenticeships are available for training or upskilling staff.

From Aprl 2026 the Growth and Skills Levy came into effect replacing the Apprenticeship Levy. Some of the key changes include:

• Levy Fund Expiry: Levy funds will now expire after 12 months, down from 24, requiring faster utilisation.
• Increased Co-investment: Employers will pay 25% of training costs (up from 5%) once levy funds are used, with the government covering the rest.
• Removal of the 10% top-up: The government’s monthly top-up will be withdrawn. Employers will only be able to access the value of their own contributions.
• SME Support: Full funding for 16-24-year-olds in SMEs, expanding from previous age limits.
• Short course “apprenticeship units” and foundation apprenticeships These will become available from April 2026, enabling employers to address skills needs without committing to full apprenticeship programmes.