Fund real AI capability, not just apprenticeships: which standards qualify in 2026, what you pay on top by age, and the five published numbers a levy decision comes down to.
Growth & Skills Levy for AI Training: How to Fund It
By James Cotton · Last updated · 17 min read
By James Cotton, Founder, iO-Sphere
Most employers ask the wrong question about the levy. They ask how to stop the funds expiring. The better question, the one that actually builds an AI-capable workforce, is what capability you'd buy with that budget if it were cash. Because it is.
Seen that way, the levy stops being a compliance line to drain before a deadline and becomes what it actually is: money set aside to make your people better at the work. Spent on real AI capability, the whole decision comes down to five published numbers that no provider's brochure will put on one page for you.
What the Growth & Skills Levy is, and what changed in 2026
The Growth & Skills Levy is a UK tax of 0.5% of an employer's annual pay bill, paid by employers whose pay bill is over £3 million a year. HMRC collects it monthly through PAYE, and a £15,000 annual allowance offsets the charge, so in practice you pay the levy on the part of your pay bill above £3 million. If you're a levy payer in England, the money lands in your apprenticeship service account, ready to spend on approved training. The rate, the £3 million threshold and the £15,000 allowance have not changed since the levy began in 2017.
One point is worth clearing up early. The levy is collected UK-wide, but the account you spend from only covers apprentices who live in England. Scotland, Wales and Northern Ireland run their own apprenticeship systems through the block grant, so an employer with staff across the UK pays on the whole pay bill and can spend only the English share through the service account.
The Growth & Skills Levy (formerly the Apprenticeship Levy) works the same way, and from April 2026 that shorter, more flexible training is delivered through short apprenticeship units, deliverable from 28 April 2026 and drawn from the same levy account, with no cap on how much of your allocation you can direct to them. This is an ongoing transition rather than a single-day switch. The 2026-27 funding rules still describe the transformation as in progress.
Two administrative changes sit alongside the name, and the dates are worth getting precise because they are easy to run together. Policy responsibility for apprenticeships and adult skills moved to the Department for Work and Pensions (DWP) on 16 September 2025, confirmed by written ministerial statement HCWS930; higher education and under-19 skills stayed with the Department for Education.
Ownership of the funding-rules guidance document itself then moved to DWP later, on 1 April 2026. The 2026-27 rules are the first the DWP has published. The apprenticeship standards, including the data and AI ones, are maintained by Skills England, the government body that approves apprenticeship standards. For a buyer, the practical translation is short. Nothing about how you access your funds has changed, you now have a wider set of things to spend them on, and some mechanics tighten from 1 August 2026.
Start with the capability map
Funding is only the mechanism. The decision that matters comes before it: what do you need which teams to be able to do over the next year or two? Ask that once a year, ideally with your CFO in the room, and you have a capability map. The training calendar comes after.
The map has four standard uses, and most levy plans only ever consider one of them:
- Graduate intakes run as funded programmes, where the levy pays for the training and you pay a salary you would have paid anyway.
- Retraining people whose roles are changing, which keeps the institutional knowledge a redundancy-and-rehire cycle throws away.
- Data and AI capability for the teams that carry the P&L, which is where the routes on this page live.
- Transfers to suppliers whose skills gaps slow your own delivery.
That map is the real innovation in the levy. Everything below is how you cost it.
The whole levy decision is five numbers on one page
Here is the worksheet the decision comes down to: five numbers, all published. Fill them in for your own organisation and the right route usually stops being a debate.
| # | The number | Where it comes from | For the AI routes on this page |
|---|---|---|---|
| 1 | Your monthly inflow | 0.5% of pay bill, less the £15,000 allowance | Your payroll data |
| 2 | The clock on it | Funds contributed from 1 Aug 2026 expire after 12 months (down from 24), and the 10% top-up is gone (gov.uk funding rules 2026-27) | Your existing pot keeps its prior terms |
| 3 | Cost per head | The standard's funding band (Skills England; revised periodically) | ST0795 Data & AI Essentials £13,000 · ST0118 Advanced Data & AI £15,000 · ST0117 AI Transformation £18,000 · ST0967 Data & AI Governance £10,000 · ST1386 Data Engineering £19,000 |
| 4 | Your cash on top | 2026-27 rules v3 | £0 for any apprentice aged 16 to 24 at every employer; for 25+: 5% non-levy, 25% at a levy payer with an exhausted pot |
| 5 | Working time | The standard's published off-the-job hours, inside paid working hours | ST0795 348 hours · ST0118 370 · ST0117 348 · ST0967 370, which we schedule as about six hours a week; ST1386 sets 418, scheduled across the programme |
The codes name official Skills England apprenticeship standards, shown here with the delivery names used above. ST0118 is the Data Analyst standard, ST0117 the Business Analyst standard, and ST0967 the Data Protection & Information Governance Practitioner standard; ST0795 and ST1386 are the standards behind our Data & AI Essentials and Data Engineering routes.
Row five is the one nobody volunteers, and it is the number the whole decision should turn on. The levy pays the funding band; your business pays the working hours. A funded programme that doesn't change what someone can do wastes the dearer of the two resources, and that is the arithmetic under everything here.
Three budget lines sit outside the levy but belong on the same sheet. Levy funds never pay wages or travel. A £2,000 hiring payment exists for a non-levy employer taking on a 16-to-24 apprentice with a practical start from 1 October 2026, though it is withdrawable in-year, so confirm it before you plan on it. And employer National Insurance is 0% for apprentices under 25 earning up to £50,270 a year.
Two of the five numbers carry more than arithmetic, and each turns on a different age line. Number three, the funding band, is a choice between routes that are not equally usable, and on one of them, Level 7, government funding stops once a new start is 22 or over. Number four, your cash on top, turns on a separate boundary at 25, above which the employer contributes. Those two age lines, 22 for Level 7 funding and 25 for co-investment, are easy to confuse, and the sections below take each in turn.
Which AI standards the levy funds, and which are traps
Skills England maintains the standards, and several map onto AI-related roles, but they are not equally usable. The gap between what is technically eligible and what you can actually run at scale is where employer budgets go to waste. Here is the ranking, with the reasoning shown.
Level 4 is the route you can use today, at scale. The Data analyst standard (ST0118) carries a maximum funding band of £15,000, and it is the vehicle for building applied data-and-AI capability in people who already work with data. We deliver it as Advanced Data & AI.
A Business Analyst route (ST0117, £18,000 band) delivers AI transformation capability, and the Data Protection & Information Governance Practitioner standard (ST0967) is the funded home for AI governance work, which we deliver as two flavours of the same standard: Data & AI Governance and Data & AI Strategy. There is no standalone AI governance apprenticeship, so ST0967 is the funded way in.
Level 4 carries no level-scoped age restriction, unlike Level 7 below, and its delivery market is deep: the analyst standard alone had 5,620 leavers in 2024-25 (DfE, March 2026). It is the level at which applied capability forms for the people who carry the day-to-day work, so if you are funding AI capability for teams that already touch data, this is where the money should go first.
Level 7 is where employers buy the wrong thing for the wrong reasons. The Artificial intelligence (AI) data specialist standard (ST0763) sits at Level 7 with a £17,000 band. It looks like the prestige route, and that prestige is exactly the trap. From January 2026, Level 7 apprenticeships are only government-funded for apprentices who, at the start of training, are aged 16 to 21, or under 25 with an Education, Health and Care (EHC) plan or care experience (gov.uk apprenticeship funding rules 2026-27).
For a 22-or-over new start, which in practice is almost every senior AI hire an employer wants to fund this way, neither your levy funds nor government co-investment are available. You self-fund, in full. Employers who reach for Level 7 to badge their senior data staff are usually answering a question about status rather than capability, and they find the funding gap only after they have built the plan around it. If the outcome you need is applied AI capability across a team, Level 4 delivers it and Level 7 does not, at a cash cost on top.
Level 6 exists. A Machine Learning Engineer route sits at Level 6 (ST1398) with a £22,000 funding band (Skills England; bands are revised periodically). We do not deliver it, and if you need data science or machine-learning engineering rather than data analysis or AI transformation, that standard or a specialist data-science programme will serve you better than forcing the need into a Level 4 shape.
The Level 5 units are a £750 hedge. Skills England approved three Level 5 AI leadership units on 21 April 2026: AI strategy and opportunity (AU0009), AI adoption, procurement and governance (AU0010), and AI delivery and organisational transformation (AU0011). Each carries £750 maximum funding and is deliverable from 28 April 2026. They run 30 to 140 delivery hours over 1 to 16 weeks, for employed learners aged 19+, and they confer no regulated qualification.
We don't deliver units, and you should know that before we say this: a unit is a funding innovation, and it does not add up to a training model on its own. A few dozen hours ends before the practice reaches the edge cases where AI capability forms. The employers for whom a unit is the right first spend are narrow: someone needing a first structured contact with the field, a team bridging to a fuller route already planned, or an employer who can fund nothing else this year. If you reach for a unit because you have not yet decided what capability you need, you have bought the hedge instead of the plan.
The full iO-Sphere line runs Levels 3 to 5, every programme built with AI integrated from the ground up: Data & AI Essentials (Level 3, ST0795, £13,000) as the entry rung, the Level 4 routes above, and Data Engineering (Level 5, ST1386, £19,000). Data is the substrate AI runs on, and data engineering is the plumbing all of it really runs on, so a plan that funds only the roles with AI in the job title skips the layer everything else stands on.
Where your need sits above our Level 5 ceiling, or where it needs a regulated qualification at Level 5 or above that neither the units nor our Level 4 apprenticeships confer, the responsible answer is to fund the higher-level standard or a degree-level route directly. We build Levels 3 to 5, and our cohorts are recent, so there is no achievement rate to show you yet: our numbers will appear in the same DfE tables as every other provider's when cohorts complete, and you should hold us to that rather than take our word for it.
What you pay on top: the age rule that decides it
The funding band is what the levy pays. What you pay on top is decided almost entirely by one thing: the apprentice's age at the start of training. From 1 August 2026 the rule is clean at the edges. Any apprentice aged 16 to 24 at the start is £0 to the employer, at every employer type, including a levy payer whose pot has run dry. For an apprentice aged 25 or over, a non-levy employer pays 5% and a levy payer whose funds are insufficient pays 25%; the government funds the rest.
This is a different age rule from the Level 7 cliff above, and conflating the two is a common and expensive mistake. The Level 7 rule is about who gets any government funding at all on that one standard, and its line is 22. The co-investment rule is about how much a funded apprentice costs the employer on every other standard, and its line is 25. A 24-year-old on a Level 4 route is fully funded; a 24-year-old on Level 7 is not funded at all.
Once the numbers say yes, the mechanics are light. Confirm the standard's current band on its Skills England page rather than a provider's brochure, which may quote a superseded figure. Brief a provider against your capability map, not a generic AI-course request. Agree how off-the-job training will be timetabled, because it must sit within the apprentice's normal, paid working hours, which is a legal protection and not an optional extra. Then add the apprentice in your service account, and the training draws down from it.
Levy transfers: the move almost no one costs
Transfers are the most underused line in the whole system. A levy-paying employer can transfer up to 50% of its unused annual funds to another employer, a share raised from 25% on 22 April 2024, and almost no large employer we speak to has costed what its expiring funds could buy at a supplier.
Run the calculation that changes the decision. Any levy you will not spend before it expires is worth nothing to you as cash, but it can fully fund AI capability at a supplier or partner whose skills gap is slowing your own delivery. You get the capability without hiring anyone, and the alternative is watching the funds lapse. The levy is not only a cost line; it is a transferable asset with a deadline.
On the receiving side, an employer with a pay bill under £3 million does not pay the levy but is not shut out. Such a business can fully fund apprenticeships two ways: through government co-investment, or by receiving a levy transfer that can cover up to 100% of the training cost. And "non-levy" refers to a pay bill under £3 million; it says nothing about headcount. Not paying in is not the same as not being able to benefit. See levy transfer for the mechanics.
What iO-Sphere believes, and why it changes the route
Underneath all of this is one conviction: capability, not technology, is the bottleneck for AI, and the evidence is stark. 95% of enterprise generative-AI pilots delivered no measurable P&L return despite $30 to 40bn of investment, and the report named the core barrier as learning, not infrastructure (MIT NANDA, "The GenAI Divide: State of AI in Business 2025", fieldwork January to June 2025).
RAND found more than 80% of AI projects fail, twice the rate of non-AI IT projects, with the top root cause being misunderstanding the problem to be solved (RAND, report RRA2680-1, August 2024). And S&P Global Market Intelligence found the share of companies abandoning most of their AI initiatives jumped from 17% to 42% in a single year (Voice of the Enterprise: AI & Machine Learning Use Cases 2025, fieldwork October to November 2024).
Read together, dated and separate, these say one thing: AI initiatives fail on adoption, the demand side, not on tools. It changes which funded route you should choose. It is why we weight a coached Level 4 programme measured in months over a 30-hour unit: adoption capability forms in sustained real-work practice, and a short unit ends before it takes hold.
Capability here is concrete. It is people who can put the current AI models, whether Claude, Gemini or OpenAI's, to work against your own data, and turn what comes back into a decision the business can act on, in the tools your teams already run such as Power BI, Tableau or ThoughtSpot. People get good at that by doing the work, coached by people who have done the job. On the programmes that have it, our learners practise on realistic case studies and simulations built from real data, for the skills a workplace cannot yet supply, so the practice environment itself is the safety.
So when you shortlist providers, judge a levy-funded programme the way you would judge one you were paying cash for: ask what learners produce, on what data, and how it is assessed. The assessment method is set by each standard's assessment plan, not the provider, and the common pattern on data and AI standards is a portfolio of real work plus a professional discussion rather than an exam hall, which matters if a written exam is what has stopped people applying before.
Two boundaries keep the spend honest. If the outcome you need is not served by any funded standard, pay cash for the right thing rather than take the funded wrong thing. And don't let the expiry clock drive the plan: spending in a panic near a deadline loses you twice over, because shelf-ware burns working time as well as budget. If the training doesn't change what someone does on Monday, it has changed nothing worth paying for.
Next steps: turn an expiring budget into a capability plan
Map the capability before you spend. Write down what each team needs to be able to do over the next year or two, and where doing-based training will compound, and you have turned an expiring budget into a capability plan. Then cost it against the five numbers, and spend against the plan.
If you're a levy payer weighing how to fund AI capability for your teams, our employer apprenticeships page sets out how our Level 4 AI Transformation programme funds through the Growth & Skills Levy: a five-figure programme that costs an eligible employer a small co-investment or, in the fully-funded cases, £0. If your need sits above Level 5, we'll say so and point you to the route that meets it. Talk to us about mapping your levy against the capability you actually need.
FAQ
Can you use the Growth & Skills Levy for AI training?
Yes. The money sits in your apprenticeship service account as a budget you direct, not a rebate you claim back, and it draws down as an approved data or AI standard is delivered. From April 2026 that same account also funds shorter, more flexible training as short apprenticeship units, with no cap on how much of your allocation you can direct to them, so it is no longer apprenticeship-only money in the way many employers assume.
Which AI apprenticeship standards can the levy fund?
Skills England-approved data and AI standards, including the Level 4 Data analyst (ST0118, £15,000), the Data Protection & Information Governance Practitioner (ST0967, the funded route for AI governance), the Level 6 Machine Learning Engineer (ST1398, £22,000) and the Level 7 AI data specialist (ST0763, £17,000). One caution: from January 2026 the Level 7 standard is only government-funded for new starts aged 16 to 21, or under 25 with an EHC plan or care experience, which is why Level 4 is the route most employers can actually use at scale.
How much is the Growth & Skills Levy and who pays it?
Employers whose annual pay bill tops £3 million pay 0.5% of it, collected through PAYE each month, and a £15,000 allowance offsets the charge so it falls only on the pay bill above £3 million. Those three figures have held since 2017; what changed in 2026 is the name and the widening range of training the same funds can buy.
Can a small business that doesn't pay the levy still fund AI training?
Yes. "Non-levy" is a pay-bill test (under £3 million), not a headcount test, and it does not lock a smaller employer out. Two funded doors stay open: government co-investment, or a transfer of a larger employer's unused funds that can meet the full training cost. If a levy-paying client or supplier has funds heading for expiry, a transfer costs them nothing and can fund your training in full.
Are the new Level 5 AI leadership units worth funding through the levy?
They fit narrow cases, such as a first structured contact with AI leadership or a bridge while a fuller route is planned, and each is funded at £750. But at 30 to 140 hours they confer no regulated qualification and won't build sustained capability on their own, and we don't deliver them. Judge a unit by what a learner will have done by the end, not by the fact that it is funded: a few dozen hours is a bridge for someone who already knows where they are going, not a substitute for deciding what capability you need.
What changes for the levy from 1 August 2026?
Three mechanics tighten from that date: the 10% government top-up on new funds is removed, funds contributed from 1 August 2026 expire after 12 months instead of 24, and a levy payer who exhausts their pot co-invests 25% for apprentices aged 25 and over. Full funding also widens to cover every apprentice aged 16 to 24 at levy and non-levy employers alike, even where a levy pot is empty (amendment of 29 July 2026), at £0 to the employer. Check the latest DWP funding rules before you budget.
When is iO-Sphere not the right provider for AI training?
If your learners already work at Level 5 and up and need genuine Level 6 or 7 depth, if you need data science or machine-learning engineering rather than data analysis or AI transformation, or if you need a regulated qualification at Level 5 or above, our Level 4 programmes are a foundation rather than the destination. In those cases fund the higher-level standard or a degree-level route directly. We deliver Levels 3 to 5, and where your need sits above that ceiling we will point you to the route that meets it.
Will it fit your cohort?
Tell us your cohort size and what your people need to be doing by next year, and we will say whether we are the right shape, including when we are not.