Levy Transfers for Small Businesses and Charities: What Moves, What It Saves You, and the Four Steps

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

By James Cotton, Founder, iO-Sphere

Where the 50% comes from

The apprenticeship levy is a payroll charge on employers whose annual pay bill is over £3 million. A levy transfer is money a levy payer moves from its apprenticeship service account, the government's online service for apprenticeship funds, to another employer to pay for that employer's apprenticeship training and assessment.

The apprenticeship funding rules for August 2026 to July 2027, published by the Department for Work and Pensions, say the annual transfer allowance is "currently set at 50%" (paragraph 234).

The base is the levy the sender declared to HMRC in the previous tax year, with the English percentage applied, which the government's guidance for senders explains as the share of its employees who live in England. The allowance is recalculated around the start of each tax year, and unused allowance is not carried forward (paragraph 234.1).

The allowance rose from 25% to 50% on 22 April 2024, and the 2026-27 rules confirm that the one allowance covers apprenticeship units as well; the 10% government top-up, no longer added to new funds from 1 August 2026, has gone from the calculation.

Connected organisations in one account share one allowance (paragraph 235). Within it, the government's funding guidance lets a sender fund any number of employers for any number of apprenticeships, its supply chain or local partners among them.

A sender moves money in one of two ways. It can publish a pledge, a public offer with a maximum for the financial year that any business can apply to, or connect directly with a business it knows through that business's account ID. It may ask a trade body or a combined authority to promote its pledges.

Levy funds entering accounts from August 2026 expire after 12 months under the levy reforms, and a transfer is one way to use them first. That clock belongs to the sender's levy; yours is set by the deadlines further down.

Who can send, and who can receive

The rules define a sending employer as a levy payer that transfers unused funds to another employer, and a receiving employer as any employer, levy-paying or not, that receives them. Any business can receive a transfer, and every receiver needs an apprenticeship service account.

The test is pay bill. A non-levy employer is one whose annual pay bill, counted with any connected employers, is under £3 million.

A non-levy employer reaches apprenticeship funding by reserving funds on the service or by receiving a transfer, and your provider agrees which with you before it claims. A transfer-funded apprenticeship needs no reservation, and the service's own guidance does not count transferred funds against your reservations.

Transferred money can pay only for apprentices you employ, or who are employed by a connected company or charity as HMRC defines it. The funding rules cover apprenticeships in England.

What a transfer pays for, and what it saves you by age

A transfer should cover 100% of the eligible training and assessment costs, up to the funding band maximum, for the whole apprenticeship (paragraph 236). The funding band is the most that transferred or government funding covers for training and assessment on a given standard, a figure Skills England publishes. English and maths up to level 2 are funded separately.

Above the band, the difference is yours in full (paragraph 250). The apprentice's wages and other costs of employment are yours too; the sender carries none of them. Transferred funds pay for training and assessment on new starts only, and the transfer must be in place before the apprentice starts (paragraph 239).

The apprentice can be someone you already employ, as long as they have not already started an apprenticeship. The one exception is an apprentice changing employer, where the transfer must be agreed by the day they start with you.

The practical period, the time the apprentice spends in training, lasts at least 8 months. Providers are paid as on any apprenticeship: monthly instalments totalling 80% of the price, up to the band, across the practical period, then 20% when the apprentice completes the end-point assessment that closes the programme.

What a transfer is worth turns on the apprentice's age at the start. For starts on or after 1 August 2026, if you do not pay the levy and the apprentice is 16 to 24, the government funds all the training and assessment costs up to the band, and the provider must not ask you to contribute (paragraphs 214.1 and 215).

For a starter aged 25 or over, your share of the funding split by age and levy position is 5% (paragraph 213.2), whether the starter is a new hire or someone you already employ.

Since a transfer also stops at the band (paragraph 236) and anything above it is yours either way (paragraph 250), a transfer saves a non-levy employer nothing on a 16 to 24 start and the 5% on a start aged 25 or over.

A levy payer whose funds have run out owes 25% on a starter aged 25 or over (paragraph 213.1), which a transfer saves. Our sum from the rules, which print no cash figures: on our programmes' bands (Skills England's figures), from £10,000 on Data & AI Governance (Level 4) to £19,000 on Data Engineering (Level 5), the 5% comes to £500 to £950 and the 25% to £2,500 to £4,750.

An employer with one or two people to train joins an open cohort, and there is no minimum number.

The economics of hiring a young apprentice include a £2,000 hiring payment, paid half at 90 days and half at 365, and a non-levy receiver using transferred funds is still eligible for it. Among the conditions: the apprentice is 16 to 24, the practical period starts from 1 October 2026, and they had worked for you no more than 90 days before it.

If a provider adds VAT and you are VAT registered, you may be able to recover it through your VAT returns. Apprenticeship units can be transfer-funded too, up to the unit's funding rate and for new unit starts, under the unit funding rules.

Our view: if your pay bill is under £3 million and the person starting is 16 to 24, reserve funds and leave transfers alone, since a transfer would only add a sender's approval and two deadlines. If they are 25 or over, apply early, because a sender can take up to 6 weeks on an application that meets its pledge's criteria in full and up to 3 months on one that does not.

The steps on the service and the clock on each

The guidance for receivers sets out the steps; the deadlines come from the funding rules. Before you start, know the standard, how many apprentices need funding, where they will work and when they should start.

Stage	What happens	The clock
Apply	Find pledges on the pledge page and apply to as many as fit, including ones whose advertised details you do not fully match. One application covers several apprentices on the same apprenticeship; different apprenticeships need separate applications.	No deadline in the rules
The sender decides	An application that fully meets a pledge's criteria is approved automatically if the sender has allowance left, though the sender may hold it for review. One that does not fully match waits for the sender to act. If you are rejected, apply again or use a reservation.	Full match: approved automatically after 6 weeks if the sender takes no action. Part match: declined automatically after 3 months without action (paragraphs 242 and 242.1)
Accept	You confirm the approved transfer on the service, or withdraw if you no longer need it.	6 weeks from approval, or the funds lapse and you apply again (paragraph 244)
Agree and approve	Agree the transfer with the sender, the standard with your provider, and the price negotiated with the provider and the end-point assessment organisation; all parties then approve on the service. Your provider must explain where you could owe a contribution, and must hold confirmation of who the sender is.	Before you enter the details on the service (paragraphs 246 and 251)
Link	Link the funds to the approved apprenticeship record. The transfer must be in place before the apprentice starts.	3 months from accepting, or the funds lapse and you apply again (paragraph 245)
Payments	The transferred funds arrive in your apprenticeship service account monthly.	Monthly, for the whole apprenticeship

If the service stalls, the Apprenticeship Service Support Desk is on 08000 150 600 or helpdesk@manage-apprenticeships.service.gov.uk, 8am to 8pm, Monday to Friday.

What a sender may ask of you

A sender can set optional criteria on a pledge: location, sector, type of job role and apprenticeship qualification level. Beyond those, it may attach no condition to the transfer, such as choosing your main provider or end-point assessment organisation for you (paragraph 240), and neither side may seek or accept inducements (paragraph 241).

Once it approves, the sender is committed to funding the apprenticeship to completion, cannot stop the payments, and pays transfers out of its account before its own apprentices (paragraph 237). Everything else is yours: once the transfer is processed, responsibility and liability for the apprenticeship, including its quality and the apprentice's employment, sit with you alone (paragraph 243).

If the sender's money runs out

A sender must keep enough allowance to cover its commitments, and the rules provide for the case where it does not. A non-levy receiver then becomes liable for part of the remaining costs, at the co-investment rate (the employer's share beside government funding) for the date the apprenticeship started (paragraph 248).

For a start on or after 1 August 2026, that rate is the age rule above (paragraphs 213.2 and 214.1), so a shortfall can cost a non-levy employer only on an apprentice aged 25 or over. A levy-paying receiver's own levy funds are used first, before it enters co-investment (paragraph 249).

Charities and the subsidy limit

The funding rules set no transfer rule of their own for charities; the word appears in them only where a connected company or charity is meant, so a charity receives a transfer as any other employer does. In March 2024 the Department for Education, which then held apprenticeship policy, answering a written question in the Lords, named charities among transfer receivers.

Part of any transfer may count towards your Minimal Financial Assistance (MFA) exemption under the subsidy control rules, £315,000 over a rolling 3 years: the part that replaces the co-investment you would otherwise have paid (paragraph 232). Your provider must make sure you complete an MFA declaration, and must report it if you go over (paragraphs 232.1 and 233).

On a start aged 25 or over at a non-levy employer, that part is the 5% of paragraph 213.2, £900 on an £18,000 band.

How many employers receive transfers, and who helps match them

In a written answer of 25 February 2026, DWP puts the non-levy employers that received a transfer in 2023-24 at 6,348: 5.9% of non-levy employers with an active apprenticeship service account that received a payment that year. Non-levy employers need not register, so that base is not every small employer.

The Department for Education's answer of 26 March 2024 gave 2,370 receivers in 2020-21, 3,700 in 2021-22 and 5,080 in 2022-23, with £13 million, £19 million and £26 million paid in those years. Those figures count payments made, including for apprentices who started in earlier years; commitments for future years are outside them.

These are four dated counts from two departments, and neither answer says its method matches the other's. The 2024 answer also said over 550 employers, ASDA, HomeServe and BT Group among them, had pledged over £37 million since September 2021, and that most non-levy employers are SMEs.

Some combined authorities broker transfers. West Yorkshire Combined Authority's Apprenticeship Levy Support Service takes a receiver's registration through its preferred training provider; the business and workplace must be in Bradford, Calderdale, Kirklees, Leeds, Wakefield or York. It says registering does not guarantee a match, and not to enrol a learner until a sender has agreed and connected with you.

Liverpool City Region Combined Authority's Employer Brokerage Team helps employers find local senders and facilitates transfers; its page displays £20.5 million transferred, 2,800 starts and 422 receiving organisations, the combined authority's own cumulative totals. In Greater Manchester, The Growth Company runs the Levy Matchfinder service for the combined authority; its portal displays 1,722 apprentices supported and over £19 million pledged.

West Midlands Combined Authority said in April 2025 that its Apprenticeship Levy Transfer Fund had funded more than 5,000 apprentices, with around £51 million of pledged donations benefiting over 2,500 businesses. In health and care, NHS Employers describes a North East and Yorkshire levy pot that grew from £884,000 in 2019 to approximately £15 million.

In London, a Greater London Authority decision of December 2025 (ADD2802) funded a project to move unspent levy to early years providers, targeting £350,000 transferred and around 50 apprenticeships by October 2026. Its analysis indicated that the vast majority of early years apprentices funded by transfer in London are over 25.

Nationally, Co-op Levy Share is a free matching service run by the Co-op and delivered by The Growth Company. Levy payers pledge levy that would otherwise expire; employers in England post an "opportunity", checked before it goes live. No transfer happens on the site: once matched, the two apprenticeship service accounts connect and the transfer is set up there.

Registering asks for your account reference and a "diversity stencil" for the apprentices concerned; the Co-op aims to close the "opportunity gap" for ethnic minority and other under-represented groups. Receivers confirm they pay apprentices at least the national living wage, whatever their age.

The site displays about £47 million pledged since May 2021 and about £5 million of an £8 million target for 2026; its Autumn 2025 impact report says more than 3,000 apprenticeships had been matched. Its FAQ says some matches are arranged within 24 hours, and that none is guaranteed, because the donor chooses.

When a non-levy employer wants a transfer, we point them to a matching service such as Co-op Levy Share, and several employers have found a sender that way.

What the pledge list shows

The public list is Find a business to fund training, on the apprenticeship service, which invites employers to apply for "funding from large businesses that want to fund 100% of your costs for apprenticeships or apprenticeship units". It carries one warning: "You'll need an Apprenticeship service account to apply for funding."

Each listing shows the sender's name and code (or "Opportunity" if anonymous), "up to £X available", and the locations, sectors, type of role and levels it funds. The site's own examples: "A large business might choose to fund apprenticeships in construction companies based in Manchester, Liverpool and Leeds" and "A large business might choose to fund digital apprentices in any sector across all of England".

About 230 pledges were listed. Together they offered "up to" about £8.3 million to £8.6 million: amounts still on offer, which fall as applications are approved, none of it money already transferred. One sum can fund several apprenticeships, and the site does not show what is committed.

The median listed pledge, the middle value, was £12,000, the smallest £2,000 and the largest about £700,000, from Royal Mail Group Limited. Almost half offered at least £13,000 and about a third at least £19,000. About 30 listings were anonymous.

More than a third were open to every location and about a third to every sector; about three in four funded every level or included Level 4. About half were open to the Charity sector and about two in five to Digital, counts that include pledges open to every sector. About 70 were created in 2026; the rest date from 2021 to 2025.

Listings come and go; these show the range. Jet2.com Limited's pledge was open to the Charity sector in every location, at every level. Brown & Brown (Europe) funded Level 4 in legal, finance and accounting, anywhere. Leeds City Council's covered Leeds, Bradford and West Yorkshire, with Charity and Digital among its sectors.

Four steps for a starter aged 25 or over

Say you are a non-levy employer, the person starting is 25 or over, and you apply on 2 November 2026. Counting the rules' 6 weeks and 3 months from that date, the latest each step can fall is:

1. Before 2 November 2026: open your account, settle the standard, numbers, workplace and start date with your provider, and post an opportunity on a matching service.
2. On 2 November 2026: apply to every pledge that fits. A full match the sender does not act on is approved automatically on 14 December 2026; a part match the sender ignores is declined on 2 February 2027.
3. By 25 January 2027 (6 weeks from a 14 December approval): accept the funds.
4. By 25 April 2027 (3 months from accepting): agree the price, approve the details on the service and link the funds to the apprenticeship record. These are the latest dates: if the sender approves sooner, every step, and the start, can come sooner, as long as the transfer is in place before the apprentice starts.

Frequently asked questions

Can a levy payer that sends transfers also receive one?

Since 1 February 2022, a levy payer with existing transfer commitments can also receive transferred funds from another levy payer, to take on new apprenticeship starts. The guidance for senders records the change, which lets a levy-paying employer send and receive transfer funding at the same time.

Can two levy payers fund one apprentice between them?

Paragraph 238 of the funding rules settles it in one line: employers cannot jointly fund an apprenticeship with another levy-paying employer. Applying to several pledges at once is still allowed; the rule applies to how the apprenticeship itself is funded.

Can a training provider that pays the levy fund the apprentices it trains?

A provider that is also a levy-paying employer, counting its connected companies, can deliver training to apprentices it funds through a transfer, as main provider or subcontractor, provided that is not a condition of the transfer (paragraphs 252 and 240).

Do public bodies sign the subsidy declaration?

Public sector employers, meaning those owned, funded or controlled by government and not engaged in economic activity within the meaning of section 7 of the Subsidy Control Act 2022, fall outside these subsidy control rules and need no MFA declaration (paragraph 233.1). The exclusion covers those employers only; charities are not in it.