Key Apprenticeship and Levy Changes Happening in 2026

As we approach the new financial and academic year, employers in England should prepare for significant changes to apprenticeship funding and levy rules. These reforms will affect workforce planning, budgeting, and training investment strategies across organisations of all sizes.

Below is a breakdown of the key updates and what they mean for employers.

1. Fully Funded Apprenticeships for SMEs Hiring Under-25s

Small and medium-sized employers that do not pay the levy will now benefit from 100% government-funded training costs for apprentices aged under 25.

This removes the previous 5% co-investment requirement, making it more financially accessible for SMEs to recruit and develop young talent.

What this means:

• Reduced upfront training costs

• Greater opportunity to invest in early careers

• Improved access to skills pipelines for growing businesses

For SMEs struggling with recruitment or succession planning, this presents a significant opportunity.

2. Introduction of the “Growth & Skills Levy”

From April 2026, the existing apprenticeship levy will transition into the new Growth & Skills Levy.

While apprenticeships remain central to the system, employers will be able to use a portion of their levy funds for approved non-apprenticeship training programmes.

The first wave of short, approved courses is expected to launch in April 2026 and will focus on priority skills shortages, including areas such as:

• Artificial Intelligence (AI)

• Engineering

• Technical and digital skills

This change introduces greater flexibility, allowing employers to address immediate skills gaps without committing solely to full apprenticeship programmes.

However, details on the proportion of funds that can be used for non-apprenticeship training are still emerging, so employers should monitor guidance closely.

3. Levy Funds Expiry Reduced to 12 Months

Currently, levy funds expire after 24 months if unspent. From April 2026, this window will be reduced to 12 months.

Impact on employers:

• Increased urgency to allocate funds

• More active levy management required

• Greater risk of losing unspent contributions

Employers will need stronger forecasting and workforce planning processes to ensure levy funds are committed in time.

4. Higher Co-Investment Once Levy Funds Are Used

Once an employer’s levy balance has been exhausted, the co-investment rate will rise to 25% of training costs, compared to the current 5%.

This represents a significant increase in employer contribution and may impact decisions around:

• The number of apprentices recruited

• Programme levels and durations

• Budget allocations for training

• 
  

Careful financial planning will be essential to avoid unexpected costs.

5. Removal of the 10% Government Top-Up

Under the current system, the government adds a 10% monthly top-up to levy funds. From April 2026, this top-up will be withdrawn.

Employers will only be able to access the exact value of their own contributions.

Result:

• Reduced overall training pot for levy-paying employers

• Greater importance placed on strategic use of funds

What Should Employers Do Now?

With multiple financial and structural changes taking effect in April 2026, employers should begin preparing early.

Key actions include:

• Reviewing current levy spend and expiry dates

• Forecasting apprenticeship starts for the next 12–24 months

• Exploring how short skills courses could complement apprenticeship pathways

• Engaging with training providers to plan ahead

These reforms aim to improve flexibility and target national skills shortages, but they also place greater responsibility on employers to actively manage their training investment.