Can the apprenticeship levy pay for apprentice wages?

No. The levy can only be spent on the training and assessment of apprentices against an approved standard, up to the funding band maximum. Wages, statutory pay, travel, subsistence and supervision costs must be met by the employer separately.

Can existing staff be trained using levy funds?

Yes, provided they meet the eligibility rules and the apprenticeship genuinely develops substantial new knowledge, skills and behaviours relevant to their role. It cannot simply accredit skills they already have.

What happens if the training price is above the funding band maximum?

The levy will only cover the training and assessment cost up to the band maximum for that standard. If the agreed price is higher, the employer must pay the difference from their own budget; the excess cannot be drawn from the levy account.

Can a levy-paying employer give funds to another organisation?

Yes. Levy-paying employers can transfer a proportion of their annual funds to other employers, who must use them for apprenticeship training and assessment under the same rules and band maximums.

What can smaller, non-levy employers do?

Non-levy employers, and levy payers who have exhausted their funds, can access apprenticeship funding through government co-investment, where the government meets most of the cost and the employer contributes the remainder, up to the band maximum. Check the current ESFA funding rules for exact percentages and any exemptions.

What Can the Apprenticeship Levy Be Spent On? A Guide for Training Providers

What the apprenticeship levy actually is

The apprenticeship levy is a UK-wide charge on larger employers, collected through PAYE. Employers with an annual pay bill above the threshold pay a percentage of that bill into the levy. In England, those funds appear in the employer's apprenticeship service account, where they can be drawn down to pay for apprenticeship training and assessment.

For training providers, understanding the spending rules matters because levy-paying employers frequently look to you for guidance. Getting this right protects your funding compliance, keeps you aligned with ESFA/DfE expectations, and helps employers make the most of the funds available to them. It is worth remembering that funding policy is devolved: the arrangements described here relate to England, and Scotland, Wales and Northern Ireland operate their own systems.

Levy funds sit in the employer's apprenticeship service account.
In England, the government applies a top-up to funds entering the account.
Unspent funds expire after a set period (funds are used on a first-in, first-out basis), so encouraging timely use is part of good account management.

What the levy CAN be spent on

The central principle is straightforward: levy funds pay for the training and assessment of apprentices against an approved apprenticeship standard, delivered by a provider on the Register of Apprenticeship Training Providers (RoATP), up to the funding band maximum for that standard.

Within that scope, the levy covers a meaningful range of costs directly related to delivering the apprenticeship.

The cost of apprenticeship training delivered against an approved standard, up to the relevant funding band maximum.
End-point assessment (EPA) fees paid to an approved end-point assessment organisation.
Training and assessment for both new recruits and existing staff, provided they meet eligibility rules and the apprenticeship is genuinely developing new knowledge, skills and behaviours.
Apprenticeships at any level, from level 2 up to degree-level, where an approved standard exists.
Re-sits or re-takes of end-point assessment, subject to the rules on how these are funded.

What the levy CANNOT be spent on

Just as important as the permitted uses are the clear exclusions. Levy funds are for training and assessment, not for the wider costs of employing someone. Misunderstanding this is a common source of confusion for employers new to the service, and clear early advice from providers prevents disappointment later.

The following costs must be met by the employer through other means, not from the levy:

Apprentices' wages, statutory pay, travel or subsistence costs.
Managerial time spent supervising or mentoring the apprentice.
Traineeships, work placement programmes or the costs of setting these up.
The costs of arranging or administering the apprenticeship internally within the employer.
Recruitment costs for the apprentice.
Any training that is not part of the approved apprenticeship, or costs above the funding band maximum (the employer pays the excess from their own budget, not from the levy).

Funding bands and the band maximum

Every apprenticeship standard is allocated to a funding band, and the band maximum is the most that can be drawn from levy funds (or co-investment) for that apprenticeship's training and assessment. Providers and employers are free to negotiate a price below the band maximum, but not above it.

If the agreed price exceeds the band maximum, the employer must pay the difference directly, and that additional payment does not come from the levy account. This is why accurate pricing conversations, grounded in the current funding band for the standard, are an essential part of the enrolment process.

Transferring unused levy funds

Levy-paying employers can transfer a proportion of their annual funds to other employers to support apprenticeships. This is particularly useful where a large employer wants to support apprenticeships in their supply chain, in smaller organisations, or in their local area.

For providers, transfers can open up opportunities to work with smaller employers who benefit from a transfer rather than needing to fund apprenticeships themselves. The receiving employer must use the transferred funds for the training and assessment of apprenticeships in the usual way, within the same rules and band maximums.

What happens when the levy runs out or an employer is non-levy

If a levy-paying employer's funds are insufficient to cover the cost of their apprenticeships, or where a smaller employer does not pay the levy at all, the government co-investment model applies. Under co-investment, the government pays the large majority of the remaining training and assessment cost and the employer contributes the rest, again up to the funding band maximum.

There are also specific rules that can reduce or remove the employer contribution, for example for smaller employers taking on younger apprentices. Because these thresholds and percentages are periodically reviewed, always check the current ESFA funding rules rather than relying on memory.

Staying compliant: practical tips for providers

Spending rules sit alongside wider funding compliance requirements, including evidence of eligibility, off-the-job training, and accurate ILR returns. Poor record-keeping around what the levy has funded is a genuine audit risk, so clarity from the outset pays dividends.

A few habits help keep everything defensible:

Confirm the correct funding band and agree a price at or below the band maximum before enrolment.
Keep clear evidence of eligibility and of the training and assessment being delivered.
Track off-the-job training and maintain robust ILR data, as these underpin the funding you draw down.
Set expectations with employers early about what the levy will not cover, so wages and supervision are budgeted separately.
Review the latest ESFA/DfE apprenticeship funding rules each year, as bands, percentages and transfer limits can change.

Keeping on top of it all

The volume of records that sit behind compliant levy spending, from evidence packs to off-the-job logs and ILR data, can be considerable. A dedicated apprenticeship management platform such as Journey can help providers keep this evidence organised and audit-ready, but the underlying discipline of understanding the rules and applying them consistently is what ultimately keeps funding secure.