The short version
- The apprenticeship levy is now the Growth and Skills Levy. It's still 0.5% of pay bills over £3 million.
- From 1 August 2026, new levy funds expire after 12 months, not 24, and the 10% government top-up has stopped.
- If your funds run out, you now co-invest 25% for apprentices aged 25 and over. Training for under-25s is fully funded.
- Use it on priority skills like AI, on young apprentices, on new apprenticeship units, or transfer some to smaller employers.
What is the Growth and Skills Levy?
The Growth and Skills Levy is the new name for the apprenticeship levy, introduced in 2017. Employers with an annual UK pay bill over £3 million pay 0.5% of their pay bill through PAYE. The money goes into your apprenticeship service account to spend on training. HMRC's guide to paying the levy covers how it's calculated.
What's new is what you can spend it on. According to the Department for Education, the levy now funds three kinds of training:
- Apprenticeships, from Level 2 upwards (Level 7 is now funded mainly for younger learners)
- Foundation apprenticeships, paid Level 2 entry jobs for eligible 16 to 24 year olds
- Apprenticeship units, short courses of 30 to 140 hours for staff aged 19 and over, including AI leadership
What changed on 1 August 2026
| Before | From 1 August 2026 | |
|---|---|---|
| Government top-up | 10% added to new funds | Removed |
| When funds expire | 24 months | 12 months for new funds |
| Co-investment when funds run out | 5% | 25% for apprentices 25+. Under-25s fully funded |
| What funds can pay for | Apprenticeships | Apprenticeships, foundation apprenticeships and units |
Funds that went into your account on or before 31 July 2026 keep the old 24-month expiry, and your oldest funds are still used first. Source: the GOV.UK guide to changes to apprenticeship levy funding.
Some standards also lost funding for new starts from September 2026, including Team Leader (Level 3), Operations Manager (Level 5) and Chartered Manager (Level 6). If your levy plan relied on those, it needs rethinking.
What it means for your budget
In short: unused levy now disappears twice as fast, and there's no top-up cushioning it. A levy you don't plan to spend is now simply a tax. And once your account runs dry, older apprentices cost you five times more than before.
The fix is to plan starts against your expiry dates, not wait for requests to come in. Your apprenticeship service account shows a forecast of when funds will expire.
Five ways to use your levy before it expires
1. Upskill existing staff into priority skills
The fastest way to use levy well is on someone you already employ. The Level 4 AI & Automation Practitioner apprenticeship sits in the £18,000 funding band, so it uses a meaningful amount of levy on a skill most organisations now need. Apprentices deliver a workplace project, like the ones in our guide to automating admin tasks with AI, so you see a return before they finish.
2. Hire apprentices under 25
Training for under-25s is fully funded even after your levy runs out, and employers pay no employer National Insurance on eligible earnings for apprentices under 25. It's the cheapest way to build a pipeline of talent.
3. Use apprenticeship units for managers
Units are short, funded courses for staff aged 19 and over. The first wave includes AI leadership units on adoption and governance, delivery and transformation, and strategy. They suit managers who need to set direction while a practitioner builds things. Our comparison of apprenticeships and short AI courses explains when each fits.
4. Transfer funds to smaller employers
Levy payers can transfer part of their funds, commonly up to 50%, to other employers such as SMEs in their supply chain, charities or local businesses. The transferred funds pay for new apprenticeship starts. It's a good use of money that would otherwise expire, and it builds goodwill. Check the current rules in your apprenticeship service account before you commit.
5. Plan starts around expiry dates
Put a start date against every block of funds that expires in the next 12 months. Training providers run groups at set times (ours starts on Monday 2 November 2026), so book ahead rather than finding out funds have gone.
Got levy funds expiring? Put them towards a Level 4 AI apprenticeship. We handle the paperwork. Check your route →
Not a levy payer?
Most small employers aren't, and the deal is even better: training for apprentices aged 16 to 24 is free, apprentices aged 25 and over cost 5%, and there's a £2,000 hiring payment for taking on someone new aged 16 to 24. See our AI apprenticeship funding guide. You can also ask a large local employer or council about receiving a levy transfer.
Quick answers
What is the Growth and Skills Levy?
It's the new name for the apprenticeship levy. Employers with an annual UK pay bill over £3 million pay 0.5% of it. The funds can now pay for apprenticeships, foundation apprenticeships and short apprenticeship units.
When do apprenticeship levy funds expire?
Funds entering your account from 1 August 2026 expire after 12 months if unused. Funds that entered on or before 31 July 2026 keep the previous 24-month expiry. Oldest funds are used first.
What is the apprenticeship co-investment rate in 2026?
For apprenticeships starting from 1 August 2026, levy payers whose funds have run out pay 25% for apprentices aged 25 and over, with the government paying the rest. Training for apprentices under 25 is fully funded.
Has the 10% levy top-up been removed?
Yes. From 1 August 2026, the government no longer adds a 10% top-up to new funds entering levy accounts.
Can I use my levy to pay for AI training?
Yes. You can use it for the Level 4 AI & Automation Practitioner apprenticeship, which sits in the £18,000 funding band, and from April 2026 for funded AI leadership apprenticeship units.
Keep reading
Last updated . Funding rules are for England and can change. We check them against GOV.UK before every update. This guide is general information, not financial or legal advice.