Billions of pounds in Apprenticeship Levy contributions expire unused every year in England.
Not because the employers who paid them decided apprenticeships were not worth it. Not because the training options were unavailable. But because the system was unclear enough, and the administrative steps involved were opaque enough, that doing nothing was easier than doing something.
If you pay the Apprenticeship Levy and have never spent a penny of it, this is an expensive misunderstanding, and it is not your fault. The system was designed by government, explained through PAYE documentation, and administered through a digital account that most HR and finance teams set up once and never log into again.
This guide fixes that. It explains how apprenticeship funding works, who can access it, what it covers, what it does not cover, what the Growth & Skills Levy changes, and what you need to do to turn your levy account, or your co-investment eligibility, into actual training that develops your team.
How Are Apprenticeships Funded? The Overview
There are two main routes through which employers access apprenticeship funding:
The Apprenticeship Levy, for employers with an annual pay bill above £3 million. Levy contributions accumulate in a ring-fenced digital account and are drawn down to pay for approved apprenticeship training.
Co-investment, for employers with an annual pay bill below £3 million. The employer contributes 5% of the agreed training cost; the government funds the remaining 95%.
Both routes operate through the government’s Digital Apprenticeship Service (DAS),an online account system that manages the financial relationship between employers, training providers, and the government’s funding mechanism. The employer does not write a cheque to their training provider. Funding flows directly from the DAS account to the provider as training progresses.
Understanding which route applies to your organisation is the starting point for everything that follows.
What Is the Apprenticeship Levy?
Who Pays It
The Apprenticeship Levy is paid by employers with an annual pay bill above £3 million. The levy rate is 0.5% of the total pay bill, but a £15,000 annual allowance means that the effective threshold is £3 million (0.5% of £3m = £15,000, exactly offsetting the allowance).
In practice, this means a business with a £3 million pay bill pays nothing in net levy contributions. A business with a £4 million pay bill contributes £5,000 per year. A business with a £10 million pay bill contributes £35,000 per year.
The levy is collected monthly through PAYE, processed alongside income tax and National Insurance contributions. Most employers pay it without senior leadership actively tracking the amounts involved, which is part of why significant sums accumulate unspent.
Where the Money Goes
Monthly levy contributions are deposited into the employer’s Digital Apprenticeship Service account, a ring-fenced pot held by the government, specific to your organisation, and accessible only for approved apprenticeship training.
The money does not disappear into general government revenue. It sits there, in your DAS account, accumulating month by month, waiting for you to use it. The employer logs into their DAS account, adds an approved training provider, and authorises payments the DAS then releases funds to the provider automatically as the programme progresses.
How to Calculate Your Levy Contribution
The formula is straightforward:
(Annual pay bill × 0.5%) − £15,000 = annual net levy contribution
An organisation with a £6 million pay bill contributes (£6m × 0.5%) − £15,000 = £30,000 − £15,000 = £15,000 per year into their DAS account.
The apprenticeship levy calculator on gov.uk allows employers to check their specific figures. Levy-paying employers in Liverpool and Wirral with multiple sites, subsidiary companies, or connected entities may operate under a connected accounts arrangement, your payroll provider or accountant can confirm the details.
The 24-Month Expiry, The Most Expensive Misunderstanding in Workforce Development
Here is the piece that most employers find out about too late: levy funds expire.
Contributions that have sat in a DAS account for 24 months without being committed to an active apprenticeship programme are returned to government. Permanently. They do not roll over. They do not carry forward. They leave your account and go back into general funding.
This is the mechanism behind the billions of pounds in unused levy that disappear from employer accounts every year, and it is entirely avoidable with adequate planning.
The practical implication is this: if your organisation has been paying the levy for two years without committing the funds to a programme, your earliest contributions may already have expired. Your most recent 24 months of contributions are still available, but only until their individual expiry dates arrive.
A well-structured apprenticeship programme typically takes 8–12 weeks to set up from initial conversation to first learner start. The sooner levy-paying organisations in Liverpool and Wirral act, the more of their available balance they can commit before expiry.
What Can the Apprenticeship Levy Be Used For?
Levy funds, and co-investment funds, can be used for:
- Apprenticeship training costs: the fees charged by a registered training provider for delivering an approved apprenticeship standard
- End-point assessment fees: the cost of the independent assessment at the end of the programme (often included within the agreed training price,confirm this with your provider)
Levy funds cannot be used for:
- Apprentice wages (the employer pays these separately, like any other employee)
- Travel or subsistence costs for learners
- Equipment, uniforms, or materials
- Any training that does not form part of an approved apprenticeship standard
The government sets a maximum funding band for every apprenticeship standard, the upper limit on what can be claimed through DAS for that programme. Richmond Training’s funded standards include the Level 2 Adult Care Worker, the Level 3 Lead Adult Care Worker (leadership development for senior care staff), and the Level 3 Data Technician with AI, all within their respective funding bands.
The Growth & Skills Levy, What Has Changed
The Growth & Skills Levy is the reformed successor to the Apprenticeship Levy. The base mechanism is the same, employer contributions through PAYE, ring-fenced in a DAS account, drawn down for approved training. The change is in scope.
The Growth & Skills Levy is designed to expand the range of funded training that levy contributions can support, beyond traditional apprenticeship routes and into accredited short courses, modular training programmes, and sector-specific upskilling that sits alongside or adjacent to a full apprenticeship. The government’s intention is to make the levy a more flexible workforce development tool, not just an apprenticeship funding mechanism.
For employers in Liverpool and Wirral, this is relevant in two ways:
First, organisations currently using their levy only for traditional apprenticeships may have more flexibility to deploy remaining funds against AI training, digital skills programmes, or sector-specific upskilling, depending on current eligibility rulings.
Second, organisations that have found the traditional apprenticeship route administratively demanding may find the expanded Growth & Skills Levy opens more accessible funded training options for their workforce development needs.
The scope of eligible spending is actively evolving. Employers should ask their apprenticeship training provider to advise on current eligibility under the latest Growth & Skills Levy rules at the time of programme design, the picture changes as government guidance is updated.
Non-Levy Employers, The Co-Investment Route
If your organisation’s annual pay bill is below £3 million, you do not pay the Apprenticeship Levy, but you are not excluded from apprenticeship funding.
How Co-Investment Works
The co-investment rate for non-levy employers is 5% employer, 95% government. Both contributions flow through a DAS account set up by the employer, not the levy account, but the same system.
For practical context: the Level 3 Data Technician with AI apprenticeship has a funding band of approximately £8,000. Under co-investment, the employer contributes £400. The government contributes £7,600. The training provider receives the full £8,000.
For a business in Liverpool or Wirral investing in one or two members of staff through a year-long programme, the co-investment cost is typically a low three-figure sum per learner, making upskilling the workforce through the apprenticeship route highly accessible even for smaller employers.
The 16–18 Exception
Employers with fewer than 50 employees who are training apprentices aged 16–18 pay nothing,the government covers 100% of the training cost, regardless of levy status. This applies to care sector employers, small professional services firms, and any other small employer with younger apprentices.
Levy Transfer,Using Someone Else’s Unspent Levy
Large levy-paying employers can transfer up to 25% of their annual levy funds to other employers’ DAS accounts. The receiving employer can use those transferred funds to pay for apprenticeship training,at no cost to themselves.
This is particularly relevant in sectors where large anchor institutions,NHS trusts, local authorities, large care groups,have unspent levy available and are willing to transfer it to smaller organisations within their supply chain, commissioning network, or sector.
For Liverpool and Wirral care providers or small professional services businesses, a levy transfer from a larger employer in their network could fund an entire apprenticeship programme with no employer contribution required. The arrangement is agreed directly between the two employers and managed through their respective DAS accounts.
If you suspect you may be eligible to receive a levy transfer, ask your training provider. Richmond Training can advise on identifying potential levy donors in the Liverpool and Wirral area and how the transfer process works in practice.
Apprenticeship Funding Bands,What They Are and Why They Matter
Every apprenticeship standard on the Register of Apprenticeship Training Providers has an associated funding band,the maximum amount that can be drawn from DAS to pay for training and end-point assessment for that standard.
Funding bands are published by the Institute for Apprenticeships and Technical Education (IfATE) and are updated periodically. They matter because:
- If the agreed training price is at or below the funding band, the full training cost is covered by the levy or co-investment
- If the agreed training price exceeds the funding band, the employer must fund the difference from their own budget,this is uncommon with well-structured programmes but worth confirming before signing
Current funding bands for specific standards are available on the Institute for Apprenticeships website and through the Find Apprenticeship Training service on gov.uk. Richmond Training will confirm the current funding band for any programme before agreeing a training price.
Getting Started,The Funding Process Step by Step
For employers who want to move from understanding the system to actually using it:
- Confirm your funding route
Check your annual pay bill. Above £3 million: levy route. Below £3 million: co-investment. Your finance or payroll team can confirm immediately.
- Set up or access your DAS account
Register or log in at manage-apprenticeships.service.gov.uk. Levy payers will find their accumulated funds already credited. Non-levy employers set up a co-investment account at the same point.
- Choose a registered training provider
Only providers on the Register of Apprenticeship Training Providers (RoATP) can receive DAS payments. For Liverpool and Wirral employers, see our guide: How to Choose an Apprenticeship Training Provider in Liverpool and Wirral.
- Agree a training plan
Your provider works with you to identify learners, agree the apprenticeship standard and training price, and set a programme start date. Richmond Training handles this from the first call.
- Add the provider to your DAS account
The provider initiates a payment request through DAS. You review and approve it,this typically takes minutes once both parties are set up.
- Training begins
Funds are released to the provider monthly as training progresses. You receive regular progress updates from Richmond Training throughout.
- End-point assessment
At the end of the programme, the learner is independently assessed. Assessment costs are drawn from the same funding agreement. On successful completion, the qualification is awarded.
Richmond Training, Apprenticeship Funding Support in Liverpool and Wirral
Richmond Training is a registered apprenticeship provider in Liverpool and Wirral, approved to deliver adult care and data technician apprenticeship programmes funded through the Digital Apprenticeship Service.
We work with employers across Liverpool, Wirral, and the wider North West on both the levy and co-investment routes ,including employers who have never set up a DAS account and need to start from the beginning, and levy payers with funds approaching the 24-month expiry window who need to commit their balance before it is lost.
Programmes available through DAS:
- Level 2 Adult Care Worker, workforce development in adult social care
- Level 3 Lead Adult Care Worker ,leadership development for senior care staff
- Level 3 Data Technician with AI, data and AI skills for the broad workforce
As a training provider in Liverpool and Wirral, Richmond Training guides employers through the full funding process ,from confirming eligibility to DAS setup, programme design, learner enrolment, and end-point assessment preparation. We also advise on levy transfer opportunities for smaller employers in care and other sectors.
Contact Richmond Training to discuss apprenticeship funding for your organisation.
Frequently Asked Questions
How does apprenticeship funding work for employers?
Apprenticeship funding flows through the government’s Digital Apprenticeship Service (DAS). Levy-paying employers (pay bill above £3 million) draw from their levy account, which accumulates monthly contributions of 0.5% of their pay bill. Non-levy employers access co-investment funding through the same DAS system, contributing 5% of the agreed training cost with the government covering 95%. In both cases, the employer adds their chosen registered training provider to their DAS account and authorises payments, funds flow directly from DAS to the provider as training progresses, without the employer writing a cheque.
What is the Apprenticeship Levy and who pays it?
The Apprenticeship Levy is a mandatory contribution paid by UK employers with an annual pay bill above £3 million. The rate is 0.5% of the total pay bill, with a £15,000 annual allowance that means only organisations above the £3 million threshold generate a net contribution. The levy is paid monthly through PAYE and credited to the employer’s Digital Apprenticeship Service account,a ring-fenced fund that can only be used for approved apprenticeship training.
Can small businesses get apprenticeship funding?
Yes. Employers with a pay bill below £3 million,who do not pay the Apprenticeship Levy,access apprenticeship training through the co-investment route: they contribute 5% of the training cost and the government funds the remaining 95%. Employers with fewer than 50 staff training apprentices aged 16–18 pay nothing at all,the government covers 100% of the training cost. Apprenticeship funding is not limited to large organisations; it is specifically designed to be accessible to small and medium-sized employers.
How long do I have to use my apprenticeship levy before it expires?
Levy funds expire 24 months after they enter the employer’s DAS account. Contributions not committed to an active apprenticeship programme within that window are permanently returned to the government. The expiry applies on a rolling monthly basis,each month’s contribution has its own 24-month clock. Employers who have been paying the levy for several years and have not committed the funds may find that some of their earlier contributions have already expired. The remaining balance is still available, but only for the duration of its own expiry window.
What is the Digital Apprenticeship Service?
The Digital Apprenticeship Service (DAS) is the government’s online account system through which all apprenticeship funding is managed. Levy-paying employers access their accumulated levy balance through DAS. Non-levy employers set up a co-investment account on the same platform. Employers use DAS to add approved training providers, authorise training payments, monitor learner progress at a high level, and manage their apprenticeship programme portfolio. It is accessed at manage-apprenticeships.service.gov.uk. Richmond Training guides employers through DAS setup and use as part of the programme onboarding process.
What is the difference between the Apprenticeship Levy and the Growth & Skills Levy?
The Growth & Skills Levy is the reformed successor to the Apprenticeship Levy. The base funding mechanism is the same ,employer contributions through PAYE, held in a DAS account, used for approved training. The key difference is scope: the Growth & Skills Levy is designed to allow levy contributions to fund a broader range of accredited workforce training, beyond the traditional full-apprenticeship route. This includes AI training, digital skills programmes, and sector-specific upskilling that sits alongside apprenticeships. The scope of eligible spending is actively evolving ,employers should consult their registered training provider for current eligibility guidance.
Conclusion
Apprenticeship funding is not as complicated as the PAYE documentation makes it look. Once the system is explained clearly, most employers discover they have more available than they thought, for longer than they assumed, and that the steps to access it are genuinely straightforward with a provider who knows what they are doing.
For levy-paying employers in Liverpool and Wirral, the risk is not that the funding is difficult to access ,it is that it expires before you access it. For non-levy employers, the risk is not knowing that co-investment makes apprenticeship training available at 5% of the cost.
Richmond Training removes both risks. As a specialist training provider in Liverpool and Wirral, we guide employers through the funding process from the first question to the first qualified apprentice,for adult care programmes, data technician apprenticeships, and any employer who wants to start upskilling the workforce through the funded route that is already available to them.
Speak to Richmond Training today about accessing your apprenticeship funding.