How to use your Growth and Skills Levy
In April 2026 the UK introduced the new Growth and Skills Levy, reforming the existing system to give businesses much more freedom to upskill and develop existing talent. This flexible approach to funding makes it easier than ever for businesses to develop their teams with in-demand skills.
What is the Growth and Skills Levy?
The Growth and Skills Levy is a minor tax that applies to businesses with an annual pay bill of more than £3 million. They must pay 0.5% of their total payroll to the digital apprentice service DAS account.
For businesses with less than £3 million in payroll, the rules are slightly different. They don’t pay towards the levy but still have access to 95% government levy funding.
What can the growth and skills levy be used for?
The Growth and Skills Levy can be used for two main pathways:
- Hiring an apprentice: The funds can bring in new talent across various fields and provide the necessary money to train candidates to meet operational standards and company culture.
- Upskilling or reskilling existing staff: This reduces the cost of navigating the recruitment market. Funds can go directly into training current team members or even transitioning them to new internal roles.
Previously, the UK apprenticeship scheme was quite restrictive. Fortunately, the Growth and Skills Levy is more flexible.
For example, you can use it for traditional apprenticeships where employees or trainees get long-form, long-track professional qualifications preparing them for a variety of internal positions within the company. Another option is to provide employees or candidates with bite-sized training modules such as apprenticeship units. Companies are allowed to use up to 50% of their annual levy pot on this, which is helpful for the acquisition of new skills like cybersecurity or AI engineering.
Finally, there are foundation apprenticeships. These are Level 2 entry programmes specifically designed for young people between the ages of 16 and 24.
How to spend the Levy effectively
Spending the levy effectively is challenging for many companies. But the overarching goal should always be to maximise return on investment using an intelligent strategy.
Start by prioritising critical future skills. Focus on education that teaches staff about cost-prompt engineering, green technology, and digital infrastructure. Deploy the money on the highest-return apprenticeship units to cultivate long-term talent within your firm and enable people to transition from one role to another more flexibly.
You also want to map out your annual training calendar carefully. Make sure that you're allocating funds to the most valuable workforce skills.
What happens to unused Growth and Skills Levy?
Under the old apprenticeship levy system, your firm had a 24-month window to spend accrued vouchers. The Growth and Skills Levy has halved the expiry window to 12 months. If the funds aren’t used within 12 months of receiving the funds, they expire and go back to HM Treasury.
This change encourages to use their levy funds more regularly and allows for more impactful skills training through programmes like apprenticeship units, which are much shorter than a typical apprenticeship.
Start your apprenticeship journey with QA
QA have kickstarted the career of over 60,000 apprentices and supported businesses with over £500m of levy funding investment.
Our expert team can support your every step of the way in building and implementing an apprenticeship programme that delivers tangible results.
If you're looking to start an apprenticeship programme, book a free consultation with our team to find out more.
FAQs
What is the Growth and Skills Levy and who pays it?
The Growth and Skills Levy is a funding tax that supports workforce training and is paid by private, public, and third sector companies with payroll bills over £3 million.
How long do employers have to spend their levy funds?
From 1 August 2026 onwards, you have exactly 12 months to spend the levy (before it is 24 months).
Can small businesses benefit from the Growth and Skills levy?
Yes, small businesses can benefit from the Growth and Skills Levy. The rules are slightly different for companies with payroll bills under £3 million.
How do I start using my Levy?
You can start using your levy after you register on the government's online Digital Apprenticeship Service (DAS). This portal allows you to select registered training providers and enrol employees formally on eligible courses.
How can QA help?
QA helps employers plan, optimise and deliver levy-funded training, from apprenticeships to targeted upskilling, ensuring your investment supports both immediate priorities and long-term growth.
Can I use my levy for existing employees?
Yes, you can use your levy for existing employees. The government is encouraging companies to upskill their talent internally.
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