Who has to pay the Apprenticeship Levy?

Any organisation with an annual pay bill over £3 million pays the Apprenticeship Levy. You pay 0.5% of your pay bill through PAYE each month, and a £15,000 government allowance is subtracted from the annual amount.

How do I calculate how much Levy my organisation will pay each month?

Multiply your total annual pay bill by 0.5%, subtract the £15,000 allowance, then divide by 12 for a monthly figure. For example, a £5,000,000 pay bill gives 0.5% = £25,000, minus £15,000 = £10,000 per year, or about £833 per month.

What can I spend Apprenticeship Levy funds on?

Levy funds can only be used to pay for approved apprenticeship training and assessment, including English and maths where required, for new recruits or upskilling current staff. You cannot use the funds for wages, travel or everyday business costs; the payment goes to the registered training provider.

How long do Levy funds last and what happens if I don't use them?

Levy funds expire after 24 months and are used on a first-in, first-out basis, so the oldest money is spent first. If you don't use funds before they lapse they are lost, so check your DAS balance and expiry dates regularly and act quickly if funds are due to expire.

Can I transfer unused Levy funds to other employers?

Yes — you can transfer up to 50% of your annual Levy payments to other employers. Transfers are set up through your Digital Apprenticeship Service account and should be agreed with the recipient employers beforehand.

How do I use the money in my Digital Apprenticeship Service (DAS) account?

Choose an approved apprenticeship training provider and agree a programme for your apprentice or member of staff; the provider will enroll learners and draw down training and assessment funds from your DAS. Regularly monitor your DAS balance and the training delivery schedule to ensure funds are used before they expire.

What practical steps can I take to avoid losing Levy funds to expiry?

Check your DAS balance and expiry dates monthly, plan apprenticeship starts so training begins before funds lapse, move suitable existing staff onto apprenticeship standards, and consider transferring up to 50% to partner employers if you cannot use all the funds. Speak to an approved provider quickly — they can suggest short starts or assessments to use funds in time.

Using your Apprenticeship Levy: a practical guide for employers

The Apprenticeship Levy can feel like a tax and a tool at the same time. If your organisation has a pay bill over £3 million a year, you pay the Levy through PAYE. That money sits in a Digital Apprenticeship Service (DAS) account. You can use it to fund Apprenticeships and training. This guide explains how the Levy works and how you can make the most of your Levy funding.

What is the Apprenticeship Levy?

The Apprenticeship Levy began in 2017. It aims to boost investment in skills across England. Employers with an annual pay bill above £3 million pay 0.5% of that bill into the Levy. You pay it automatically through your PAYE. The government adds a £15,000 allowance to reduce the amount paid. Levy funds must be used for approved Apprenticeship training with registered providers, such as VQ Solutions.

Working out your contribution

Calculating your Levy is simple. Use this two-step method:

Multiply your total annual pay bill by 0.5%.
Subtract the £15,000 government allowance.

Example:

Annual pay bill: £5,000,000
0.5% of pay bill: £25,000
Minus allowance: £25,000 − £15,000 = £10,000 per year

This is collected monthly through PAYE. You do not need to submit a separate Levy payment. If you want to know the monthly amount, divide by 12. In the example above you would see about £833 go into your DAS each month.

The expiry rule you need to know

One of the most important points is that Levy funds do not last forever. Funds expire after 24 months. The system works on first-in, first-out (FIFO). That means the oldest money is used first. If you do not use funds in time, they simply disappear.

Check your DAS balance regularly. Look at the dates when money will expire. If large amounts are due to lapse within a few months, act quickly. You can use funds for new Apprenticeships or to upskill current staff.

What can you spend Levy money on?

Levy funds are for training and assessment related to recognised Apprenticeship standards. You can spend the money to:

Recruit new apprentices.
Upskill existing staff by putting them on Apprenticeship standards.
Pay for training, assessment and end-point assessment.
Fund English and maths training where required.

You cannot use Levy funds to pay wages, travel expenses, or day-to-day business costs. The funds pay the training provider. That is why you choose an approved provider, like VQ Solutions, to deliver the training and manage drawdowns from your DAS account.

There are Apprenticeship levels for many job types. These include:

Intermediate and advanced levels.
Higher Apprenticeships (degree level).
Degree and master’s level Apprenticeships.

This range means you can support entry-level recruits and senior staff development with the same funding mechanism.

Transferring unused Levy

If you cannot use all your Levy, you can transfer up to 50% of your annual Levy payments to other employers. That flexibility can help both you and local businesses. Common options include:

Transfer to SMEs in your supply chain.
Support training for local community employers.
Help partner organisations build skills that benefit your network.

If you do not have a recipient in mind, VQ Solutions can help connect you with employers who need Levy funding. Transfers must follow government rules and are arranged via your DAS account.

Practical tips to make the most of your Levy

Use these practical actions to avoid losing funds and to maximise impact:

Check your DAS account monthly. Note expiry dates for funds.
Audit roles that would benefit from formal training. Think beyond entry-level posts.
Map business skills gaps to Apprenticeship standards. Use standards that match job roles.
Plan intake and training schedules so funds are spent before expiry.
Consider transferring up to 50% of unused Levy to partner employers.
Keep records of training plans and progress to meet funding rules.
Talk to your training provider early. We can help you plan costs and delivery.

A simple Levy strategy could save thousands. Even small changes in recruitment timing or starting an Apprenticeship programme sooner can preserve funds.

How VQ Solutions can help

VQ Solutions is an approved training provider with experience in Levy-funded Apprenticeships. We can help you:

Review your DAS balance and upcoming expiries.
Identify Apprenticeship standards that fit your roles.
Design training plans for new or existing staff.
Manage enrollments and drawdown procedures in the DAS.
Connect you with other employers if you want to transfer funds.

We work with businesses across sectors. Our advice focuses on practical outcomes. We will help you turn Levy funding into real workforce development.

Next steps: a quick checklist

Use this checklist to take action this month:

Log into your Digital Apprenticeship Service account.
Check your current balance and expiry dates.
Identify one or two roles that could benefit from Apprenticeship training.
Speak to VQ Solutions about suitable standards and timings.
Decide if you will transfer unused Levy to other employers.
Set a review schedule for your Levy strategy (quarterly recommended).

Conclusion

The Apprenticeship Levy is a valuable source of funding for skills development. It is straightforward to calculate and automatic to pay. But you must manage your DAS account actively because funds expire after 24 months. You can use Levy funding to recruit apprentices or to upskill existing staff at many levels. If you cannot use all your funds, you can transfer up to 50% to other employers.

If you want help getting started, VQ Solutions can guide you. We will review your Levy position and build a clear plan that makes sense for your organisation. Don’t let your Levy funds go to waste — check your DAS today and get a strategy in place.

Contact VQ Solutions to arrange a Levy review and apprenticeship strategy session. Let’s make your Levy work for your people and your business.