Introduction 04 Economic and political context 04

Apprenticeship Levy
The UK Government has prioritised the number and quality of 
apprenticeships. Funding for this expansion is being supported through 
an apprenticeship levy which is paid as a direct tax by employers. This 
ensures that businesses pay a fair share of training costs and promotes 
a ‘demand led’ approach to TVET. 
In 2017, The UK Government introduced an apprenticeship levy of 0.5% 
of wages, that applies to all large UK companies with a pay bill over £3M. 
Currently, only 2% of employers pay the apprenticeship levy. Levy 
paying businesses can access their funds through an online 
apprenticeship service (account) which can be spent on apprenticeship 
training in England. The UK Government estimates and shares the 
annual levy pot to support training in the devolved administrations. 
The levy includes funding of apprenticeship training for all employers. 
Smaller employers, with a total annual pay bill of less than £3million, pay 
5% of the cost of their apprenticeship training and the Government pays 
the rest. Smaller companies contract directly with colleges and training 
providers, which allows employers a greater choice and voice in TVET. 
Levy paying employers can also transfer up to 25% of their levy funds to 
other employers. This aims to make sure the system is flexible, meets 
the needs of employers and will also help smaller businesses to invest in 
more training opportunities. Levy paying employers have up to 24 
months to spend their levy funds. Any unspent levy funds within each 
financial year are redistributed to support existing apprentices, pay for 
apprenticeship training for smaller employers and additional payments 
required to support apprentices.
How is TVET funded?
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