THE amount collected from employers through the Apprenticeship Levy has reached a record £4.39 billion – but experts are asking “where has the money gone?”
EdTech platform Turing College analysed monthly and annual Apprenticeship Levy receipts contained within HM Revenue & Customs’ wider UK tax receipts data.
The Apprenticeship Levy is paid by employers with an annual payroll of more than £3 million and is intended to support investment in apprenticeship training. Apprenticeships can be used both to bring new people into the workforce and to help existing employees develop new capabilities, move into more skilled roles and respond to changing business needs.
The analysis found that receipts increased by 7.1% during the 2025/26 financial year, rising from £4.10 billion in 2024/25 to a new annual high of £4.39 billion.
The amount collected annually is now 93.4% higher than in 2017/18, the levy’s first full financial year, when receipts stood at £2.27 billion. Employers have contributed approximately £29.8 billion through the levy since it was introduced in April 2017.
The average amount collected each month during 2025/26 was approximately £366 million, compared with £342 million a month during the previous financial year.
But despite these eye-watering sums, experts are asking where the money has gone and whether it actually helps employers and employees.
Where has the money gone?
Lukas Kaminskis, CEO of EdTech platform Turing College, said: “Employers have contributed almost £30 billion through the Apprenticeship Levy since it was introduced, and the annual amount collected is now nearly twice what it was during the levy’s first full financial year.
“That represents a significant investment by British businesses, but the real measure of success is not simply how much money is collected. It is whether that investment helps employers build the skills they need and gives people meaningful opportunities to progress in their careers.
“Apprenticeships are still often seen mainly as a route into work for school-leavers. That remains an important part of their purpose, but they can also be an extremely effective way of helping existing employees retrain, develop specialist knowledge and move into roles that businesses are struggling to fill.
“This is becoming more important as AI, data and digital technology reshape jobs across almost every sector. Employers cannot always respond to skills shortages by recruiting externally, particularly when demand for specialist talent is high. Upskilling existing staff can be faster, improve retention and preserve valuable knowledge within the organisation.
“The continued growth in levy receipts needs to be matched by accessible, flexible and relevant learning opportunities. Training must fit around people’s jobs and provide skills that can be applied in the workplace. When it does that effectively, both employees and employers benefit.”
Kate Underwood, Founder at Southampton-based Kate Underwood HR and Training, asked if the huge outlay is worth it for employers and employees.
She added: “Is the Apprenticeship Levy worth it? Depends who you ask. Big corporates? They see a tax. Another line on the payroll to moan about. Half never spend it, and the leftovers drift quietly back to the Treasury. That’s how you collect thirty billion quid and still can’t say where it went. Now ask the small firms I look after. Totally different story.
“For them it’s a lifeline. Bring fresh talent through the door, or upskill the team you’ve already got, and barely pay out a penny beyond the time it takes. Here’s the bit that counts. Invest in people and they feel valued, so they stay. Loyalty you can’t buy, only earn. The catch? Time.
“Training takes mentoring, patience, hours a busy owner hasn’t always got. But get it right and the payoff is massive. A skilled, committed person who actually wants to be there. One firm’s stealth tax is another firm’s shot at building a team that sticks. So fix the admin. Protect the positives. Don’t let the paperwork bury the best deal going.”
Tax on employers
Harvey Dhillon, CEO at Zmartly, said it’s just another tax on businesses.
He added: “Where has the money gone? Nowhere hidden. The levy is a payroll tax wearing a training badge. There is no pot with your name on it. It joins general tax, and a separate fixed budget pays for training, so the total collected cannot tell you the training spend. Nothing is missing. It was never yours.
“Go over a £3 million wage bill and you pay 0.5% of the whole bill, not just the part above, less a £15,000 allowance. A haulier on £10 million pays £35,000 a year. That is another salary. For a builder with 12 staff who pays nothing in, it gets better on 1 August 2026, when apprentices aged 16 to 24 are funded in full up to each course cap.
“For the firms who do pay, it gets worse. New funds will expire after 12 months instead of 24, and once your balance runs out your share of the cost jumps from 5% to 25. Half the time, five times the bill. If you pay the levy, start before August. If you do not, wait.”
Ritesh Sood, CEO at London-based Soul Mortgages, said the amount of money has doubled but the number of young apprentices has halved.
He added: “Record receipts, but ask two questions. Who pays, and where does it go? On paper, it’s a tax on big employers. In practice, contractors inside IR35 pay it too: umbrella companies deduct the 0.5% levy from their day rates, so individual contractors personally fund a corporate training scheme they’ll never benefit from. A stealth payroll tax.
“As for the money, nearly £30 billion has been collected since 2017 yet apprenticeship starts among 16 to 24-year-olds fell about 40%. We doubled the cash and halved the young apprentices. Why? Unspent funds expire after 24 months and vanish back into the Treasury, over £3 billion lost so far, while firms rebadged MBAs for existing managers as “apprenticeships” just to claw something back.
“And from April 2026, the expiry window will be halved to 12 months, guaranteeing even more expires. Any levy whose best feature, from the Treasury’s view, is the money that goes unspent, isn’t a training scheme. It’s a revenue scheme wearing a hi-vis jacket.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial Ltd, said too many businesses just see it as a tax.
He added: “Used properly, the levy is genuinely worth it. The reason for the ‘where has it gone’ question is that too many employers pay in and never build the structure to spend it, so the money expires and returns to the Treasury as an unplanned tax. Cutting the expiry window from 24 months to 12 only makes that worse.
“My challenge to other businesses is to have the courage to use it: build real training and real career paths, and teach young people AI alongside the core role, because that is the workforce we are all going to need. Government could be more ambitious too. The full funding for 16 to 24 year olds from August is a good step, and I would like to see far more of it. Get this right and the levy stops being a tax and becomes one of the best investments a business can make.”
Photo by Bjorn Pierre on Unsplash.
