Levy Transfer

A levy transfer is where levy-paying employers can transfer up to 10% of their levy pot to other employers which they can spend on Apprenticeship standard training in England.

What is this about and what is it designed to achieve?

There were already several ‘10 percent’ in Apprenticeship funding – the 10% extra funding added to English levy payments to ensure that “employers can get out more than they put in”, the 10% contribution for non-levy funding (90-10) and the 10% of deprived areas attracting extra funding.

However the ‘10% transfer’ was first mooted in 2016 and was designed to allow larger employers to ‘support their supply chains’.

Why transfer my apprenticeship levy funds?

Large employers that pay the apprenticeship levy can choose to transfer up to 25% of their levy funds each year to other businesses, to pay for their apprenticeship training and assessment.

Transferring levy funds is a way of supporting other businesses by deciding which sectors, skills or local areas you’d like to fund.

For example, you could support the engineering sector across England, or fund digital apprenticeships in your local area, or support any apprenticeships in a particular town or city.

Which businesses and apprenticeships you support with a transfer is your choice.

Your transfer allowance

Your allowance is calculated as 25% of your previous financial year’s apprenticeship levy funds. The apprenticeship service calculates this amount as 25% of:

• the total amount of levy you declared in the previous tax year
• with the English percentage applied (the percentage of your employees that live in England)
• plus the top-up payment of 10% from the government

You cannot transfer more than your 25% allowance in each financial year.

Who can I transfer my apprenticeship levy to?

It is your choice which businesses you transfer levy funds to. Any business can receive a transfer of levy funds, including businesses that pay the apprenticeship levy and those that do not.

All businesses will need an apprenticeship service account to receive a transfer of levy funds. Businesses that pay the apprenticeship levy can choose to either send or receive a transfer of levy funds, but cannot send and receive at the same time.

What can levy transfers pay for?

Transferred funds can only be used to pay for apprenticeship training and assessment up to the funding band maximum.

Transfers can only be used for a new apprentice start. This doesn’t mean the apprentice has to be a new employee. It means you cannot receive transfer funding for an employee who has already started their apprenticeship.

The exception to this is when an apprentice changes employer. The apprentice can continue their apprenticeship with a new employer, funded by a transfer.

How can the prime minister’s new Apprenticeship Levy Reform Help FE?

In the latest release, Rishi increased funding to over £2.7 billion, removing co-investment costs from non-levy paying employers from April 2024 for apprentices under the age of 22, increasing the levy transfer cap to 50%, and simplifying the apprenticeship system. These measures are expected to enable up to 20,000 more apprenticeships, primarily benefiting young people and SMEs.