The apprenticeship levy explained
The apprenticeship levy explained: NowSkills digital apprenticeships
The Apprenticeship Levy is a government-mandated charge on UK employers whose annual pay bill exceeds £3 million. It requires organisations to contribute 0.5% of their total employee earnings into a digital account, which can be spent on approved training. From April 2026, the scheme has been renamed the Growth and Skills Levy. The core mechanic is unchanged, but the reform widens what the funds can pay for: alongside full apprenticeships, employers can now use levy funds for Apprenticeship Units — shorter, more flexible training aimed at upskilling existing staff, including our new AI Leadership units.
Who pays the apprenticeship levy?
– Employers with a pay bill over £3 million per year
– Calculated monthly through PAYE submissions
– Paid in at 0.5% of total employee earnings above the threshold
– Funds expire 24 months after entering the account if paid in before 31 July 2026, or 12 months if paid in from 1 April 2026 onwards
– Every employer also receives a £15,000 annual allowance to offset against the levy charge itself.
Because the levy is effectively “use-it-or-lose-it,” NowSkills guides employers to plan digital apprenticeship programmes early, ensuring every pound contributes to upskilling your team.
How levy funds work
Once paid, levy contributions sit in your apprenticeship service account and can be spent on:
– Training fees for approved apprenticeship standards and Apprenticeship Units / End-point or skills assessment costs / Transfer up to 50% of your annual funds to other employers, including supply-chain partners
If your levy funds run out, you move to co-investment: 5% employer / 95% government until 31 July 2026, then 25% employer / 75% government from 1 August 2026. The 10% government top-up on levy funds also ends from 1 August 2026.
NowSkills handles submissions, compliance checks, funding bands – eliminating administrative burden.
Fund AI Leadership training through your levy
Apprenticeship Units are one of the biggest changes under the Growth and Skills Levy — shorter, sharply-focused training blocks (30–140 hours, delivered over one to sixteen weeks) built from real occupational standards. For the first time, levy-paying employers can use their levy account to fund this kind of training, alongside full apprenticeships. Non-levy employers can access Apprenticeship Units fully funded by government.
NowSkills currently delivers three Level 5 AI Leadership units, designed for managers and senior leaders rather than technologists, and built to be completed alongside a full-time job:
- AI Leadership: AI Strategy and Opportunity (AU0009)
- AI Leadership: AI Adoption, Procurement and Governance (AU0010)
- AI Leadership: AI Delivery and Organisational Transformation (AU0011)
Each unit has a maximum government funding rate of £750 and a minimum of 30 delivery hours. They can be taken individually or as a progression — strategy, then adoption and governance, then delivery and transformation.
Why NowSkills for digital apprenticeships?
– Bespoke training plans that align with your business objectives
– Regular funding health checks to prevent expiry of levy funds
– Dedicated compliance support to satisfy ESFA and Ofsted requirements
– Detailed ROI reporting on digital skill improvements and productivity gains
Whether you need software developers, data analysts, or AI specialists, our digital apprenticeship expertise turns levy payments into measurable business outcomes.
Steps to invest your levy in digital skills
1. Register with the Apprenticeship Service and access your levy account.
2. Partner with NowSkills to select the right apprenticeship standard or Apprenticeship Unit for your team.
3. Agree a training plan, delivery schedule, and funding breakdown.
4. Enrol apprentices, track off-the-job hours, and submit training claims.
5. Review impact reports and plan your next cohort.
Key Benefits
– Levy funds can offset approved training costs in full, for as long as your account balance lasts
– Accelerated digital transformation through on-the-job learning
– Enhanced employer brand by investing in workforce development
– Reduced recruitment costs by upskilling existing staff
FAQs: the apprenticeship levy explained
Can I transfer unused levy funds?
Yes, you can transfer up to 50% of your annual funds to other organisations, such as supply-chain partners.
What happens to unspent funds?
Funds paid in before 31 July 2026 expire after 24 months; funds paid in from 1 April 2026 onwards expire after 12 months, oldest funds first. NowSkills helps you budget and forecast to avoid waste.
How do I start?
Contact NowSkills today for a free consultation on how to leverage your levy for digital apprenticeships.
By understanding “The Apprenticeship Levy Explained” and partnering with NowSkills, you turn a regulatory requirement into a strategic investment in your company’s digital future.
Can I use my levy for something other than a full apprenticeship?
Yes. Since the reform to the Growth and Skills Levy, levy funds can also pay for Apprenticeship Units — shorter, flexible training such as our AI Leadership units — for the first time.
Will my employee ever need to pay towards their training?
No. Under the Apprenticeship Unit Funding Rules, learners cannot be asked to make any financial contribution towards their training, regardless of how the course is funded.
Why levy employers choose apprenticeships with NowSkills
Apprenticeships help Levy employers:
- Maximise their Levy investment
- Build a sustainable talent pipeline
- Upskill staff in critical areas like AI, digital, and leadership
- Improve retention and engagement
- Deliver better public services and commercial outcomes
With flexible training options, strategic impact, and no recruitment fees, NowSkills apprenticeships are one of the most cost-effective ways to invest in your workforce.
Ready to make your levy work harder?
Our Employer Partnerships Team at NowSkills is here to help you unlock the full value of your Levy. Whether you’re in the private sector or delivering public services, we’ll guide you every step of the way.
Contact our Employer Partnerships Team to build your apprenticeship strategy today.