One of the most common questions employers ask when considering apprenticeships is simple: Does the apprenticeship levy pay for wages? The short answer is no. Growth & Skills Levy funds cannot be used to pay apprentice wages. However, that does not mean apprenticeships are expensive or of poor value. In fact, when understood properly, the levy remains one of the most cost-efficient ways for employers to develop skills and grow talent.
This article explains exactly what the funds can and cannot be used for, how wages fit alongside the training, and what financial responsibilities remain with the employer.
No. The Levy does not pay for wages.
Those funds are strictly ring-fenced for apprenticeship training and assessment costs only. This applies whether you are:
Any costs associated with employing the apprentice, including salary, must be paid by the employer. This distinction is central to understanding how apprenticeship levy wage bills work in practice.
Although the levy does not cover wages, it does fund the most expensive part of apprenticeships: structured training and assessment.
Eligible costs include:
For levy-paying employers, these costs are paid directly from the organisation’s Digital Apprenticeship Service (DAS) account. For non-levy employers, the government covers 95% of these costs through co-investment, with the employer contributing 5% (or 0% if a levy transfer is in place).
To avoid confusion, it’s equally important to understand ineligible expenses.
Growth & Skills Levy funds cannot be used to pay for:
These costs remain the employer’s responsibility and sit outside the apprenticeship wage levy framework.
While the levy does not cover wages, employers are legally required to pay apprentices at least the appropriate wage rate.
This may be:
Many employers choose to pay apprentices above the minimum, particularly when training existing employees or using apprenticeships for upskilling rather than entry-level recruitment. Wages are paid as part of normal payroll processes and should be factored into workforce planning alongside funded training.
Although wages are not funded by the levy, apprenticeships still offer strong financial value.
Employers benefit from:
When compared with external courses, consultancy fees, or recruitment costs, apprenticeships often deliver a higher return on investment, even when wages are paid separately. This is why many organisations view the levy as a way to reduce overall training spend, not eliminate employment costs entirely.
Although the Growth & Skills Levy does not fund apprentice wages directly, employers can benefit from a range of government incentives and payroll savings that significantly reduce the overall cost of employing an apprentice.
The government provides cash incentive payments to employers who take on apprentices in specific age and support categories. These payments are made via the training provider and are paid directly to the employer.
Employers receive £1,000 (per apprentice) when recruiting:
The payment is made in two instalments:
For eligible foundation apprenticeships (typically ages 16–21, or 22–24 with an EHC plan or care experience), employers may receive up to £2,000 in staged payments.
Foundation apprenticeships are currently available in targeted sectors such as construction, digital and health, and eligibility should be checked for the relevant funding year.
Employers can also benefit from National Insurance relief when employing younger apprentices.
If an apprentice is:
Then the employer does not pay Class 1 National Insurance contributions on their earnings (within limits). For many organisations, this represents a meaningful saving on payroll costs over the duration of the apprenticeship.
While levy funds must still be used within the standard expiry period, these additional incentives help offset employment costs and improve the overall return on investment.
Understanding how wages fit into apprenticeship funding helps employers plan more effectively.
Key considerations include:
For levy-paying employers, unused funds expire after 24 months (this is expected to be reduced to 12 months according to announcements made during the Autumn budget), so failing to use the levy often means paying for training twice: once through the levy and again through unfunded learning.
Even though the levy does not pay for wages, it significantly reduces the cost of developing talent.
Apprenticeships allow employers to:
When training is funded, and wages are already part of normal payroll, apprenticeships become a strategic investment rather than an additional cost.
To maximise value, employers should:
With the right planning, apprenticeships can support growth, productivity, and long-term workforce development, even though wages sit outside levy funding.
If you want to understand how apprenticeships could work for your organisation, including funding options, wage considerations, and programme selection, Impact Academy can help. Book a discovery call to explore how to make the most of apprenticeship funding while planning effectively for wage costs.
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