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What is the Apprenticeship Levy and how does it work?

The Apprenticeship Levy is a funding system in England which aims to create 3 million new apprenticeships – individuals accessing approved professional development courses and qualifications.

Apprenticeship Funding for Employers

Employers with an annual payroll of more than £3 million pay 0.5% of their payroll into the Apprenticeship Levy. The government adds 10% to each monthly levy payment. The levy payment is held in a digital account, which is set up at the apprenticeship service. Each individual’s training costs are deducted from the account and paid to the provider monthly.

The system is different for employers who have a pay bill of less than £3 million. any training and assessing costs are shared with the government, with employers paying 5% and the former covering the remaining 95%. These employers agree on a payment schedule with the provider.

If a levy-paying employer runs out of funds in their levy account, they can trigger the non-levy route.

Degree Apprenticeship Funding

Employers can choose to spend their apprenticeship levy funding as they wish, including providing opportunities for current and aspiring leaders to study a level 7 qualification. These senior leader apprenticeships ensure a rigorous standard of professional development for both managers and leaders.

For instance, at Alliance Manchester Business School, our PG Diploma Management Practice can be accessed using apprenticeship levy funding. This course offers employers a cost-effective way to develop leaders, helping you to build a successful and sustainable business.

European Social Fund - Match Funding

European Union social fund logo

In accordance with the ESFA Funding Rules, non-levy paying employers may be accessing funding that can be used as match funding for the European Social Fund (ESF).

ESF is one of the available funds within the European Social and Investment Funds (ESIF) 2014 to 2020 Programme. The ESFA acts as a co-financing organisation (CFO) to procure and manage contracts for ESF funded provision on behalf of Local Enterprise Partnerships (LEPs). LEPs decide how to invest the ESF for 2014 to 2020 and the ESFA supports them to deliver their ESIF strategies that meet the local needs identified.

As a CFO, the ESFA must match ESF funds contracted with money from the UK government (that is, eligible mainstream programme funds). They are required to use some of the funding from the government to pay for an amount of training and support that is equivalent to the ESF contract. Activity is identified that improves the skills of the workforce and helps people who have difficulties finding work. The ESFA must report this match funding and the associated learners within our funding claims to the ESF Managing Authority in England.

For provision that is identified as used for match funding, the learning activity and its associated funding become part of the ESF programme, which means that the same rules apply as those of the ESF programme. Further information on the ESF funding can be found at the ESF 2014-202 Funding Rules.

Employers who believe that they are eligible for this match funding should contact the Apprenticeship Funding & Compliance Team at for further information.