Every week we have a version of this conversation with a Brighton business owner. "We don't pay the levy, so apprenticeships aren't for us, right?" Wrong, but understandable — the levy was sold as a tax on big businesses and small businesses naturally assumed it was someone else's problem. Here's what the levy actually is, and why it matters even if you'll never pay it.
What the levy is, in one paragraph
The apprenticeship levy is a 0.5% tax on UK employers with an annual pay bill over £3 million, introduced in April 2017. The money goes into a digital account that the employer can only spend on apprenticeship training. Anything unspent after 24 months goes back to the Treasury. The point: get larger employers funding their own skills pipeline.
If you're a levy payer
You've already paid it. The 0.5% has been coming out of your payroll every month since 2017. It's sitting in a digital account on the apprenticeship service. Currently around £4 billion of levy expires unspent every year and goes back to HMRC — that's billions of training that could have happened and didn't.
You can draw down from your account to fund apprenticeships in your own business. Government adds a 10% top-up on what you've paid in — so £1 of levy becomes £1.10 of spending power. You can also transfer up to 50% to other businesses, which is increasingly common.
If you're a non-levy employer
You pay nothing for the levy itself. But you can still hire apprentices. Government covers 95% of the training cost; you co-invest 5%. For a Level 3 digital apprenticeship with a £18,000 funding cap, that's £900 of your money over the 14-month length — about £60/month.
If your apprentice is 16–18, or up to 24 with EHCP or care-leaver status, the government covers 100%. Most of our non-levy SME employers pay nothing for the training, and only the apprentice's salary on top.
The thing nobody talks about: levy transfer
Since 2018, levy payers can transfer up to 50% of their annual levy to other businesses' apprenticeships. The receiving business doesn't need to be a supplier or partner — it just needs to be a real employer wanting to hire a real apprentice.
For an SME, levy transfer is the cheapest possible route into apprenticeships. The transferring employer covers 100% of training cost; the receiving employer pays nothing. We help match the two sides — if you're a Brighton SME wanting to receive a transfer, or a levy payer with unused funds you'd like to direct toward local SMEs, talk to us.
Why this matters even for tiny employers
If you're a five-person agency or a single-founder business, you can hire an apprentice. We've placed apprentices with employers as small as two-person teams. The funding rules don't change with size — and small employers actually get more favourable terms.
What does change is the right shape of role. A two-person team can't realistically support a Level 4 Software Developer apprenticeship — there's not enough varied work and not enough mentor time. But Level 3 Multi-Channel Marketer? Easy. Content Creator? Easy. These standards are designed for environments where the apprentice is a meaningful chunk of the team's marketing output, not the most junior of twelve people.
What it doesn't cover
The levy / co-investment funding pays for training: the off-the-job day, the tutor time, the EPA, the learning platform. It does not pay for the apprentice's wages — that's all you. It also doesn't pay for travel, equipment, or external certifications outside the apprenticeship standard.
In practice for a 14-month Level 3 apprenticeship: total spend by a non-levy employer is around £900 of co-investment plus £25,000–£28,000 of apprentice salary over the 14 months. Compare that to recruiting a mid-junior marketer at £35,000+ with agency fees of £5,000.
The shortest version
If you have a digital skills gap, an apprenticeship is almost always cheaper than hiring on the open market. If you're a levy payer, it's basically free. If you're not, it's almost free. The thing standing between most employers and using it is just the perception that it must be more complicated than this. It isn't.