I have come into the apprenticeships world recently, after nine years in recruitment. Nine years of watching businesses struggle to find, keep and grow good people. And I already know one thing for certain. The apprenticeship levy is one of the most misunderstood pots of money in British business.
Nearly every employer I talk to says one of two things. Either “we do not know how to spend our levy,” or “we are always looking for ways to spend it.” Both come from the same place. The money is sitting there, and no one has ever shown them how to use it properly. That matters more than ever right now, because the rules are about to change.
Half the time
to spend it.
First, the basics. If your pay bill is over £3 million a year, you pay the apprenticeship levy at 0.5% of it, with a £15,000 allowance to offset it. That part is not changing. What is changing is what happens to the money once it lands in your account.
It is not
laziness.
In my experience, employers do not waste their levy because they are lazy. They waste it because no one explains the process. The same gaps come up again and again.
What the levy can actually be spent on is rarely explained, so it is left untouched in case it is spent wrongly.
What you need to do inside your own business when you take on an apprentice is a mystery until someone walks you through it.
Lining up a real job with the right apprenticeship standard feels like guesswork without a guide.
Turning an apprenticeship into a genuine job role, rather than a bolt-on, is the part people find hardest of all.
None of that is hard once someone sits down and shows you. But if no one does, the money just sits there and expires.
Not cheap labour. An investment, if you treat it like one.
When it fails,
look closer.
Let me be blunt. When an apprenticeship does not work, it is not always the apprentice. Very often it is how they were brought in, trained and managed. Sometimes an apprentice leaves because of you, not because of them.
Before you tell me the calibre of young people is low, ask yourself two things. What training do you give your managers when you hand them an apprentice to look after? And what is your actual end goal from taking one on? This is not cheap labour. It only becomes cheap labour if you treat it that way.
Get it right and an apprenticeship is one of the best things a business can invest in. My advice is always the same, and it is simple. Build apprenticeships into your people strategy and your training plans from the start. Do not bolt them on at the side.
Overdue, but
not enough.
I think the 2026 changes are overdue. But they are not strong enough. These next bits are my opinions, not government policy.
That is the number I cannot get out of my head. We all have a role to play in changing that, and the levy is one of the tools sitting right in front of us.
This is for
you too.
Most of what I have said so far is about businesses that pay the levy. But here is something a lot of smaller employers do not know, and it is one of the biggest things they miss. You do not have to pay the levy to get an apprentice trained for free.
95% funded as standard. If you are a smaller business, the government pays 95% of your apprentice’s training and you pay just 5%.
Fully funded in key cases. Fewer than 50 staff and taking on an apprentice aged 16 to 18? The training is 100% funded, you pay nothing. Same for a 19 to 24 year old who is a care leaver or has an education, health and care plan.
A £1,000 payment. You also get £1,000 for taking on a 16 to 18 year old.
Going further from 2025/26. The government is fully funding apprenticeships for eligible under 25s at smaller, non levy paying businesses.
Larger businesses can pass up to half of their unused levy to other companies to pay for training. So a big employer near you could cover the full cost of your apprentice’s training, and some actively look for local businesses to pass it to. One thing to be clear on: this money pays for the training and the assessment, not the wage. You still pay your apprentice a wage, at least the apprentice minimum. But the training itself, the part that usually puts people off, can cost you nothing.
So if you run a small business and you have always thought apprenticeships are not for you, think again. The training could be free. You just have to ask.
You do not need to
fix it all at once.
Just start.
Matching your levy to your teams and your plans, with no jargon and no hard sell, that is what I do. A good local college is one of the most useful partners a business can have, and at Oaklands it is exactly the kind of conversation we like having. Your money. Your people. Do not let it expire.
Sources & references
Opinions in this piece are marked as the author’s own. Apprenticeship funding rules are changing through 2025 and 2026, so check the current GOV.UK guidance before acting on any figure here.
- Apprenticeship levy rate, threshold and allowance (0.5% of pay bill over £3 million, £15,000 allowance). GOV.UK, “Pay Apprenticeship Levy”.
- 2026/27 changes (10% top-up ending, funds expiring after 12 months, 25% employer contribution once funds are used). HM Government, Budget 2025 (Growth and Skills Levy).
- Larger employers can transfer up to 50% of their annual levy funds to another business to pay for apprenticeship training and assessment only, not wages. GOV.UK, “Transferring your apprenticeship levy to another business”.
- Non-levy employer funding: government pays 95% and the employer 5% of training; fully funded (100%) for employers with fewer than 50 staff taking apprentices aged 16 to 18, or 19 to 24 care leavers or those with an education, health and care plan; £1,000 employer payment for a 16 to 18 apprentice. GOV.UK apprenticeship funding rules.
- Full government funding for eligible under 25s at non-levy (SME) employers from the 2025/26 academic year. HM Government, Budget 2025 (Growth and Skills Levy).
- Around 957,000 young people aged 16 to 24 not in education, employment or training, early 2026. Office for National Statistics, “Young people not in education, employment or training (NEET), UK”.