Growth & Skills Levy

Part of our topic guides on Government-Funded Data & AI Training and Data & AI Apprenticeships.

The Growth & Skills Levy is a UK tax on large employers' pay bills that funds apprenticeship training — 0.5% of any pay bill over £3 million, collected monthly through PAYE. It's the same mechanism as the former Apprenticeship Levy, now transforming from April 2026 to also fund shorter, more flexible training alongside full apprenticeships.

Why it matters

If you run payroll for a business with a pay bill over £3 million, you're already paying this whether or not you've used a penny of it. Every month the government sets aside your contribution in a digital account you can spend on training — leave it unspent for too long and it expires, so an unused levy pot is money quietly walking out the door.

Our view: the smart move isn't just "spend it before it expires" — it's spending it on training that actually builds capability. From April 2026 the levy also funds short apprenticeship units (the first deliverable from 28 April 2026), and we're candid about those: the funding per unit is too low to deliver real quality, which in our view makes them dead in the water as a capability route — a narrow stopgap at best. A full apprenticeship, where a coach who's done the job takes someone from foundations to genuine competence, is what the levy is actually worth spending on. The levy is plumbing; what you build with it is the point.

How it works

Rate: 0.5% of your annual pay bill, for any employer with a pay bill over £3 million.
Allowance: every employer gets a £15,000 annual allowance that offsets the charge (connected companies share one allowance).
Collection: monthly, via PAYE — the same system as tax and National Insurance.
Spending: funds sit in your Digital Apprenticeship Service (DAS) account and can only pay for approved apprenticeship training and end-point assessment — never wages, travel or other employment costs.
Expiry: funds paid in before 1 August 2026 last 24 months; funds paid in from 1 August 2026 last 12 months. Unspent funds expire on a rolling basis.
Scope: the levy is collected UK-wide (tax is reserved policy), but the account you spend from only covers apprentices who live in England. Scotland, Wales and Northern Ireland receive a population-based share via the block grant and run their own, separate apprenticeship systems.
If you don't pay it: a pay bill under £3 million means you're a non-levy employer — you can still fully fund apprenticeship training through government co-investment, or by receiving a transfer of unused funds from a levy-paying employer, often covering the training's full cost.

Standards are currently maintained by Skills England, and apprenticeship funding policy sits with the Department for Work and Pensions (DWP), following the machinery-of-government move from the Department for Education confirmed on 16 September 2025.

Common questions

What's the difference between the Apprenticeship Levy and the Growth & Skills Levy?

Same tax, new name, wider job. The rate, the £3 million threshold and the monthly PAYE collection are all unchanged. What changes is what the money can buy: from April 2026 the levy starts funding shorter, more flexible training alongside full apprenticeships, beginning with apprenticeship units from 28 April 2026.

What training can the levy actually pay for?

Approved apprenticeship training and end-point assessment, including the data and AI standards, plus — from 28 April 2026 — short apprenticeship units. It can never pay wages, travel or other employment costs. One carve-out worth knowing: from January 2026, Level 7 (Master's-level) apprenticeships aren't fundable for new starters aged 22 and over — not even from your own levy funds.

What happens if we don't use our levy funds?

They expire and return to government. Funds paid in before 1 August 2026 last 24 months; funds paid in from 1 August 2026 last 12 months, both on a rolling basis. Before that happens you have two options: spend the funds on apprenticeship training, or transfer up to 50% of your annual funds to another business — a transfer can cover an apprenticeship at a smaller employer in full, at no cost to them.

Can the levy fund AI and data skills training?

Yes — data and AI apprenticeships (data analyst, data engineer and the AI standards) are exactly the kind of training the levy exists to pay for. Three Level 5 AI leadership units are also fundable from 28 April 2026 — with the caveat on unit depth above.