For years, UK employers with a payroll above £3 million have been paying into the Apprenticeship Levy, and a significant number have never used a meaningful proportion of it.
Between 2017 and 2022, an estimated £3.3 billion in unspent levy funds was returned to government. Not because employers didn’t have training needs. Not because their workforce didn’t need development. But because the rigid, apprenticeship-only model simply didn’t match the way large organisations actually needed to invest in their people.
The Growth & Skills Levy changes that. Announced by the UK government as a fundamental reform of the skills funding framework, it replaces the old Apprenticeship Levy with something far more flexible, and far more useful for organisations that take workforce development seriously.
This guide explains exactly what the Growth & Skills Levy is, who pays it, what it can fund, and how employers in Liverpool, Wirral, and across the UK can turn it from a payroll deduction into a genuine strategic investment.
The Growth & Skills Levy – A Quick Definition
The Growth & Skills Levy is the successor to the Apprenticeship Levy, introduced by the UK government as part of the wider Skills England reforms. At its core, the financial mechanism is the same: employers with an annual pay bill above £3 million contribute 0.5% of their pay bill into a levy account, from which they can draw down funds to pay for approved training programmes.
What is fundamentally different is what that money can now be used for.
Under the old Apprenticeship Levy, funds could only be spent on approved apprenticeship standards, a restriction that left many employers unable to use their contributions for the training their businesses genuinely needed. Under the Growth & Skills Levy, the scope is significantly broader, reflecting the government’s recognition that meaningful workforce development encompasses far more than the traditional apprenticeship pathway.
Skills England, the new executive body established to oversee the UK’s skills system, manages the Growth & Skills Levy framework. It works with employers, training providers, and sector bodies to ensure that fundable programmes genuinely reflect the skills the economy needs, from technical apprenticeships to leadership development and emerging technology training.
Who Pays the Growth & Skills Levy?
The same threshold that applied to the Apprenticeship Levy applies here: any employer with an annual pay bill above £3 million.
The calculation is straightforward:
- Rate: 0.5% of your total annual pay bill
- Allowance: a £15,000 annual allowance is deducted from the total
- Result: a business with a £10 million pay bill contributes £35,000 per year (£50,000 at 0.5%, minus the £15,000 allowance)
Contributions are collected monthly by HMRC through PAYE, alongside employer National Insurance and income tax. They accumulate in a digital apprenticeship service account, accessible through the government’s apprenticeship service portal.
There is one critical rule that many employers discover too late: unspent levy funds expire after 24 months and are returned to government. Every month that passes without a deliberate training strategy is money your organisation has contributed and cannot recover.
The Growth & Skills Levy applies across the public sector, private sector, and third sector. There is no industry exemption, if your pay bill exceeds £3 million, you contribute.
How the Growth & Skills Levy Differs from the Apprenticeship Levy
The Apprenticeship Levy was introduced in April 2017. The principle behind it was sound: large employers contribute to a national skills fund, and draw from it to develop their workforce through apprenticeships. The problem was the implementation.
Apprenticeship standards are long, structured, and relatively inflexible. For employers in professional services, financial services, technology, and senior management roles, many of the programmes on offer simply didn’t map to genuine business need. A company with a pressing requirement for AI training for businesses, mid-career management upskilling, or accelerated leadership development couldn’t access levy funding for any of it, because none of it fit an approved apprenticeship standard.
The result was predictable. Employers paid in, found they couldn’t use the funds appropriately, and watched them expire.
The Growth & Skills Levy directly addresses this mismatch. It retains the financial structure of the Apprenticeship Levy but fundamentally expands what the funds can be spent on, creating a genuine mechanism for strategic workforce investment rather than a narrowly defined apprenticeship subsidy.
What Can the Growth & Skills Levy Fund?
This is where the Growth & Skills Levy becomes genuinely interesting for employers who have previously watched their contributions sit unused.
The reformed framework funds a significantly wider range of training than its predecessor, including:
Apprenticeships – traditional and degree-level apprenticeships remain fully fundable, including senior leader programmes that map to MBA-level learning. These continue to be the backbone of the levy-funded training landscape.
Skills Bootcamps – shorter, intensive training programmes (typically 12 to 16 weeks) designed to build specific technical competencies quickly. Particularly relevant for digital skills, data analysis, and emerging technology disciplines.
Foundation Apprenticeships – a new, shorter entry-level qualification designed for younger people or career changers who are not yet ready for a full apprenticeship programme. Bridging the gap between education and employment.
Leadership development – one of the most significant changes for large employers. Senior and middle management development programmes, which were consistently identified as a levy-funding gap under the old Apprenticeship Levy, are now accessible through the reformed framework.
AI training for business – as artificial intelligence moves from a technical curiosity to a board-level business imperative, AI skills training for employees is increasingly fundable under the Growth & Skills Levy. For employers in Liverpool, Wirral, and nationally who are investing in AI capability building across their workforce, this is a material change.
Workforce upskilling – targeted skills interventions for existing employees across a wider range of disciplines, not restricted to new hires or entry-level joiners.
The practical implication: if your organisation has been paying into the Apprenticeship Levy and struggling to use it effectively, the Growth & Skills Levy is worth reviewing from scratch. The funding landscape has changed materially.
The Problem the Growth & Skills Levy Is Designed to Solve
The £3.3 billion in unspent levy funds returned to government between 2017 and 2022 is not an anomaly, it is a structural outcome of a system that was too rigid to serve the actual training needs of UK employers.
The employers most likely to have underused the Apprenticeship Levy are precisely those with the most complex and varied workforce development requirements: large professional services firms, financial institutions, technology companies, NHS trusts, and public sector organisations. For all of them, upskilling the workforce effectively requires a mix of programmes that the apprenticeship-only model couldn’t accommodate.
The Growth & Skills Levy is the government’s acknowledgement that workforce development is not a one-size-fits-all proposition. Equipping a mid-career finance professional with the skills to lead in an AI-enabled organisation is not the same problem as training an 18-year-old to become an electrician, yet both represent genuine, high-value investment in the workforce. The reformed framework is built on that recognition.
For employers in Liverpool and Wirral who operate in sectors with high skill-change velocity, financial services, logistics, manufacturing, healthcare, the Growth & Skills Levy represents a material opportunity to fund workforce transformation that wasn’t available under the previous system.
How to Maximise Your Growth & Skills Levy
Paying into the levy is not optional. Making the most of it is, and the difference between a strategic approach and an unplanned one is the difference between genuine workforce transformation and watching your contributions expire.
Start with a levy audit. Understand exactly what your organisation contributes each year, what has been spent, what has expired, and what remains available. Many employers are surprised by how much they hold in their digital account.
Map your training priorities to fundable activities. Not everything your organisation might want to invest in qualifies, but the Growth & Skills Levy’s expanded scope covers considerably more ground than its predecessor. Leadership development, AI training for your workforce, skills bootcamps, and structured upskilling programmes are all worth reviewing against the current fundable list.
Plan for the 24-month expiry. Levy funds that sit unused expire and cannot be recovered. A rolling training plan ensures you are drawing down funds ahead of expiry, not scrambling to find something, anything, to spend them on before the window closes.
Work with a specialist provider. Think works with employers across Liverpool, Wirral, and the North West to build levy strategies that align training investment with actual business priorities, from AI training in Liverpool and Wirral to leadership development programmes that build the management pipelines large organisations need.
Think – Your Growth & Skills Levy Partner
Think is a specialist in levy-funded workforce development, working with employers across the North West and nationally to ensure their Growth & Skills Levy contributions generate real business value.
Our expertise spans the full range of fundable training disciplines, from leadership development and degree-level apprenticeships to AI training for businesses and targeted workforce upskilling programmes. We understand both the technical detail of the levy framework and the strategic workforce challenges that employers are actually trying to solve.
For employers in Liverpool, Wirral, and across the UK looking to understand what the Growth & Skills Levy means for their organisation, or frustrated by years of underusing the Apprenticeship Levy, Think provides the consultancy, programme design, and delivery capability to make the reformed framework work.
Speak to Think today about turning your Growth & Skills Levy into a strategic workforce investment.
Frequently Asked Questions
What is the Growth & Skills Levy?
The Growth & Skills Levy is a reformed skills funding framework introduced by the UK government to replace the Apprenticeship Levy. It retains the same contribution mechanism, employers with a pay bill above £3 million contribute 0.5%, but significantly broadens what the funds can be used for, including Skills Bootcamps, Foundation Apprenticeships, leadership development, and AI training programmes alongside traditional apprenticeships.
When did the Growth & Skills Levy start?
The Growth & Skills Levy was announced by the UK government as part of the Skills England reforms, with phased implementation from 2025. The new framework expands the eligible training types available to levy-paying employers and is being introduced alongside the establishment of Skills England as the body overseeing the UK’s skills system.
Who pays the Growth & Skills Levy?
All employers in England with an annual pay bill above £3 million are required to contribute 0.5% of their pay bill to the Growth & Skills Levy, minus a £15,000 annual allowance. Contributions are collected through PAYE each month and credited to a digital apprenticeship service account. The levy applies to public sector, private sector, and third sector organisations above the threshold.
How is the Growth & Skills Levy calculated?
The levy is calculated at 0.5% of your total annual pay bill, minus a £15,000 allowance. For example: a business with a £5 million pay bill would contribute £10,000 per year (£25,000 at 0.5%, minus the £15,000 allowance). Contributions are paid monthly through PAYE and accumulate in a digital account that must be used within 24 months.
What can the Growth & Skills Levy be used for?
The Growth & Skills Levy funds a broader range of training than the old Apprenticeship Levy, including: apprenticeships (including degree-level and senior leader programmes), Skills Bootcamps, Foundation Apprenticeships, leadership development programmes, AI training for businesses, and targeted workforce upskilling interventions. Fundable activities must be delivered by an approved training provider and meet the criteria set by Skills England.
How is the Growth & Skills Levy different from the Apprenticeship Levy?
The Apprenticeship Levy, introduced in 2017, could only be used for approved apprenticeship standards, a restriction that left many employers unable to use their contributions effectively. The Growth & Skills Levy retains the same contribution structure but significantly expands the eligible training types, allowing employers to fund Skills Bootcamps, Foundation Apprenticeships, leadership development, and AI training programmes in addition to traditional apprenticeships. The key change is flexibility: the reformed framework aligns levy spending with the actual workforce development needs of modern organisations.
Conclusion
The Growth & Skills Levy is a meaningful improvement on the Apprenticeship Levy, but only if employers approach it strategically. The same employers who watched contributions expire under the old system will do the same under the new one without a deliberate plan.
For organisations in Liverpool, Wirral, and across the UK, the reformed framework offers something the Apprenticeship Levy never could: the ability to fund workforce development that actually reflects your business priorities. Leadership development. AI training for your people. Skills Bootcamps that address specific competency gaps. Structured upskilling for mid-career professionals.
Think specialises in helping employers turn that opportunity into a training programme that delivers. If your organisation contributes to the Growth & Skills Levy and wants to make sure every pound works harder, get in touch with our team today.
Contact Think to discuss your Growth & Skills Levy strategy.
