Apprenticeship Levy Transfer: How Gifting Unused Funds Works

Two employers are looking at the same problem from opposite ends. A large levy payer has money in a digital account it knows it will not spend. A thirty-person business in its supply chain wants to train a technician and has never heard of a levy transfer. The median funding band across the standards we list is £12,000, which means a single unspent slice of a big employer's levy can fund an apprentice outright. The mechanism to move it has existed for years. Most of the money still goes nowhere.

What happens to levy funds you don't spend?

Levy money does not sit in your apprenticeship service account indefinitely. Funds enter the account monthly and expire 24 months after they enter it, with the oldest funds used first, as set out in GOV.UK guidance on managing apprenticeship funds. The money draining out of your account this month is money you paid two years ago.

For a large employer with a slow approval cycle and a flat recruitment plan, that is predictable leakage rather than bad luck. You can see it coming a year out. Finance sees it as a sunk tax. HR sees it as a failure to deliver a plan.

A transfer is the only route that converts expiring funds into training rather than nothing. It is also the only route that buys you something back: capability in your supply chain, a local labour market that produces the skills you recruit for, and a story about the levy that isn't an apology.

Who can send a transfer, and how much?

Any employer who pays the levy can send one. The levy applies to employers with an annual pay bill above £3 million, charged at 0.5 per cent with a £15,000 annual allowance, according to GOV.UK guidance on paying the apprenticeship levy.

There is a ceiling on generosity. An employer can transfer up to 50 per cent of the annual funds in its account, and can pledge funds to other employers through the apprenticeship service, per the same GOV.UK guidance on managing apprenticeship funds. Transfers are made to fund apprenticeships at another employer, not to hand over cash.

The commitment matters more than the headline. When you agree a transfer, you are agreeing to fund that apprenticeship for its full duration, which for many standards means two or three years of monthly payments. Treat it as a multi-year budget line, not a one-off gesture. Plenty of sending employers get this wrong and then discover they have committed next year's transferable balance as well as this year's.

Why aren't smaller employers asking for transfers?

Because nobody tells them. If you don't pay the levy, apprenticeship funding arrives as a set of rules you were never handed. Most owner-managers we speak to assume the levy is somebody else's money with somebody else's conditions attached.

The practical position is simpler than it looks. Without a transfer, a non-levy employer usually co-invests 5 per cent of the training cost and government funds the rest, and employers with fewer than 50 staff taking on an apprentice aged 16 to 21 can have training and assessment fully funded, as described in GOV.UK guidance on employing an apprentice. A transfer removes the co-investment share where it would otherwise apply.

If you are on the receiving side, start by getting clear on what you would be entitled to anyway. Our guide on maximising apprenticeships when you don't pay the levy sets out the sequence. A transfer is worth chasing, but not before you know whether your apprentice is already fully funded, because in that case the transfer buys you nothing and the sender's money is better spent elsewhere.

What does a transfer actually pay for?

Training and end-point assessment, up to the maximum of the funding band for that standard. Nothing else.

The receiving employer still pays the apprentice's wage in full. Travel, equipment, uniform, supervision time and the cost of the apprentice being away from productive work all sit with the receiving employer too. Off-the-job training happens during paid working hours, which is the real cost most small employers underestimate.

The funding band is a ceiling, not a fixed price. If a provider quotes above the band maximum, the excess cannot come from transferred funds and the receiving employer pays it directly. That is worth establishing in writing before anyone signs, because a sending employer will not usually agree to cover a gap it did not know existed.

What to check before you agree a transfer

• Standard eligibility and band. Confirm the current funding band and approval status for the specific standard using the Institute for Apprenticeships list of approved standards. Do this per standard, not once per year.
• Total commitment, not monthly cost. Multiply the monthly payment by the full duration of the apprenticeship, then check it against your transferable balance for every year it runs.
• Provider quality. The receiving employer chooses the provider, but the sending employer's name is attached to the outcome. Look at Ofsted grades and employer review patterns before agreeing, not after.
• Who handles a withdrawal. Agree in advance what happens if the apprentice leaves, changes standard or takes a break in learning.
• Whether the receiver needs it. If their training is already fully funded, redirect the pledge to an employer who has to co-invest.

How the two sides find each other

Sending employers can pledge funds openly through the apprenticeship service, which is how most matches now happen, and a growing number of large employers run named transfer programmes aimed at their own supply chains. If you are a sender, the quickest wins are usually one tier down from you: the contractors, hauliers, installers and agencies whose capacity gaps already cost you money.

If you are a receiver, arrive with a specific ask. Name the standard, the number of apprentices, the start date and the provider. A vague request for funding gets ignored; a costed plan for two level 3 engineering apprentices starting in January gets a conversation. Line up delivery first by using our tool to search training providers by standard, location and Ofsted grade, then approach potential funders with the plan already built.

Frequently asked questions

Can we transfer levy funds to any employer?

You can transfer to any employer that can take on an apprentice, including businesses with no connection to yours. There is no requirement for them to be in your supply chain, and no requirement for them to be small. The receiving employer must be registered on the apprenticeship service and must have chosen a provider and a standard before the transfer is set up.

Does a transfer cost the receiving employer anything?

It covers training and assessment up to the funding band maximum, so it removes the co-investment contribution a non-levy employer would otherwise make. Everything else remains yours: the apprentice's wage, the time they spend in off-the-job training, and any cost quoted above the band maximum. Budget for the employment cost, not just the training cost.

Do transfers cover degree-level apprenticeships?

Transfers are not restricted by level in principle, but confirm the current funding band and eligibility for your specific standard before committing anything, since higher-level standards are reviewed centrally and bands differ widely. Check the standard itself on the Institute for Apprenticeships list of approved standards and get the provider's quote in writing against that band.

What happens if the apprentice leaves part-way through?

Monthly payments stop when delivery stops, so the sending employer is not liable for training that never happened. The receiving employer and the provider handle the withdrawal or break in learning. Agree the reporting line for this before the transfer starts, because senders who discover a withdrawal three months late lose confidence in the whole arrangement.

How far ahead should a sending employer plan?

Further than most do. Because funds expire on a rolling basis, the balance you can transfer next year depends on spending decisions you make now. Forecast your own apprenticeship starts first, identify the surplus, then pledge against it. Leaving the decision to the final quarter usually means the money lapses before a receiving employer can recruit.

If you are on either side of this, the practical next step is the same: fix the standard and the provider before you talk about money. Use our provider search to compare delivery by standard, region and Ofsted grade, then build the transfer conversation around a plan somebody can actually approve.