The Growth & Skills Levy Explained

This guide explains the Growth & Skills Levy (previously called the Apprenticeship Levy) in plain English. No jargon, no policy waffle, just what you need to know and why it matters.

So, what actually is the Growth & Skills Levy?

Put simply, the Growth & Skills Levy is a way for larger employers to fund apprenticeship training. If your organisation has an annual pay bill of over £3 million, you’ll pay:

• 0.5% of your total payroll
• Collected automatically through PAYE

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That money goes into a digital apprenticeship account, which you can then use to pay for apprenticeship training.

How does the levy work day to day?

Once the levy is paid:

• The money appears in your digital account
• You choose an approved training provider and a relevant programme
• Funds are paid directly from your account to the provider

What if you don’t pay the levy?

Good news, you can still use apprenticeships. If your pay bill is under £3 million, you don’t pay the levy, but you can access apprenticeship funding through a government co-investment model. This has made apprenticeships a popular and affordable option for SMEs wanting to develop new or existing staff.

Are apprenticeships just for new starters?

Not at all. Apprenticeships can be used for

• Existing employees
• New hires
• Career progression into new roles
• Developing managers and leaders

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The key rule is that the apprenticeship must help the learner build new skills, knowledge and behaviours relevant to their role.

What’s changing in 2026?

The levy itself isn’t going away, but some of the funding rules are changing under the upcoming Growth & Skills Levy reforms. Here’s the simple version:

• SMEs will get fully funded apprenticeships for eligible under-25s
  No employer contribution required.
• Levy funds will expire faster
  The expiry window will reduce from 24 months to 12 months.
• The 10% government top-up is being removed
  Levy funds will reflect exactly what you pay in.
• Employer contributions will increase in the co-investment model
  From 2026, employers will pay 25% of training costs, with the government covering 75%. This happens when either your levy runs out or you don’t pay into the levy.

What does this actually mean for employers?

For SMEs, apprenticeships become even more accessible, especially for building early-career talent.

For levy-paying organisations, it introduces a stronger need for early planning, forecasting, and timely programme starts, particularly if you want to avoid losing funds or absorbing higher co-investment costs.

For all employers, apprenticeships are still one of the most effective ways to build long-term capability across teams.

How BMS Progress can help

At BMS Progress, we deliver apprenticeship programmes in:

• Sales
• Leadership & Management
• Coaching
• Project Management
• Customer Service

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We help employers by:

• Explaining funding rules in plain English
• Making sure levy funds don’t go to waste
• Matching apprenticeships to real business needs
• Supporting learners from start to finish

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If the levy has ever felt confusing, you don’t have to figure it out on your own.

Want to chat about apprenticeships or levy planning?

We’re always happy to talk things through and help you find the right option for your business.