Apprenticeship Co‑Investment Guide for Levy‑Paying Employers

 

Essential information to ensure levy funds and co‑investment contributions are managed correctly

  1. Understanding Apprenticeship Levy Funding

If you are a levy‑paying employer, all apprenticeship training costs are normally paid using the funds in your Digital Apprenticeship Service (DAS) levy account. These funds:

  • Are used to pay the training provider for the cost of apprenticeship training and assessment.
  • Expire 24 months after entering the account if not used.

Important Note: From August 2026 faster expiry of levy funds – employers will have 12 months, reduced from 24, to use their levy contributions before they expire

  • Are drawn down automatically each month when a learner is on programme.

Important: You must ensure there are sufficient levy funds available to cover the full duration of each apprentice’s programme.

  1. What Happens if Levy Funds Run Out?

Even levy‑paying employers may need to pay co-investment if their levy balance becomes insufficient at any point.

If your levy account balance is too low:

  • The Government pays 95% of the remaining monthly training costs.
  • You (the employer) must pay 5% directly to the training provider.
  • Payments must be made monthly, aligned with the apprentice’s funding schedule.

This is known as co‑investment.

Important note: From August 2026, the DfE will not continue to pay 95% (leaving employers to pay 5%) under the new rules. The 5% employer co‑investment model is ending and will be replaced by a 25% employer contribution.

  1. Employer Responsibilities Under Co‑Investment

To avoid disruption to a learner’s programme, levy‑paying employers must:

  • Regularly check your levy account

We strongly advise monitoring the levy balance monthly, ensuring you have enough funds to support all active apprentices.

  • Plan ahead for multiple apprentices

If you have several apprentices or plan to grow your workforce, your levy may be used quicker than expected.

  • Budget for potential co‑investment

If your levy funds deplete, co‑investment becomes mandatory.
Co‑investment must be paid promptly to the training provider to avoid:

  • Delayed training
  • Interruption of learning
  • Non‑compliance with Dfe funding rules
  • Keep payment records updated

Payments must be reported and evidenced to the Dfe via the provider’s ILR records and audit requirements.

  1. How to Check Your Levy Account (Digital Apprenticeship Service)

Employers can monitor their balance via the Apprenticeship Service:

  1. Sign into your account: 👉 https://accounts.manage-apprenticeships.service.gov.uk
  2. Select ‘Finance’
  3. View:
    • Levy balance
    • Expiry dates
    • Forecasted spend
  4. Check for any upcoming payments or expiring funds
  5. Review projected costs for all active apprentices

We recommend assigning this responsibility to HR, Finance or L&D teams to ensure ongoing compliance.

  1. Why This Matters

Failure to monitor your levy account may result in:

  • Unexpected co‑investment charges
  • Missed payments to providers
  • Training pauses
  • Compliance issues during Dfe audit
  • Poor learner experience and potential withdrawal

Timely employer payments are essential to keep apprentices progressing smoothly.

  1. When Co‑Investment Applies (Quick Summary)
Situation Applies? Notes
Levy funds fully cover training ❌ No 100% funded via levy
Levy funds run out mid‑programme ✔ Yes Employer pays 5%*
Levy funds expired after 24 months* ✔ Yes Employer pays 5%*
Employer chooses not to use levy ✔ Yes Employer pays 5% regardless
Levy transfer received from another employer ❌ No Transferred funds cover 100%

*Levy funds will expire after 12 months from August 2026 and Employers will have to pay 25%
*This rule will also apply to when Levy funds run out mid-programme and the Employers will have to pay 25%

Does the new 25% co‑investment rule from August 2026 apply to levy transfers?

No – the 25% rule does not apply when levy funds are transferred.
A levy transfer continues to cover 100% of the apprentice’s training cost for the receiving employer.

This means:

  • The donor employer (the one giving the transfer) pays using their levy funds.
  • The receiving employer pays £0 — they do not pay 5% now, and they will not pay 25% under the 2026 rules.
  • Co‑investment only applies when the receiving employer is paying out of pocket — which does not happen with transfers.
  1. Provider Expectations (What We Need From Employers)

To ensure uninterrupted funding and learner progression, we ask all levy‑paying employers to:

  • Check levy funds at least once per month
  • Notify us immediately if levy funds are forecasted to run out
  • Process co‑investment invoices promptly
  • Ensure internal finance teams understand the 5% and 25% requirement
  • Keep DAS account access active and up to date

This partnership ensures compliance with DfE requirements.