What's changing with the Apprenticeship Levy?
The long-standing Apprenticeship Levy is officially being replaced by the Growth and Skills Levy. Driven by a clear government initiative to tackle youth unemployment and expand pathways into meaningful work, the new framework fundamentally reshapes how training funds are distributed across England's workforce.
What does this mean for levy payers?
For Levy-Paying Employers (payroll over £3m):
- The end of the 10% top-up: The traditional 10% government top-up ends on 31 July 2026. With less funding available, levy-paying employers will have to focus on prioritising quality apprenticeship programmes over quantity
- Funds will expire after 12 months: Unspent funds will now expire after 12 months rather than 24. This change requires a greater need for proactive planning to ensure employers commit and spend their levy funds
- 25% contribution after funds have been exceeded: Employers exceeding their funds will now need to contribute 25% of apprenticeship costs, with the government paying 75%.
What does this mean for non-levy payers?
Non-levy paying employers (smaller schools and settings):
- From October 2026, non-levy paying employers can receive a £2,000 incentive for recruiting new apprentices aged 16–24, payable after 90 days of employment. The government is doubling down on support for young talent by removing co-investment costs entirely for apprentices aged 16 to 24. For adult learners aged 25 and over, the co-investment rate remains at 5%.
Employer incentives and the Growth and Skills Levy
At the heart of the Growth and Skills Levy is a renewed commitment to early-career pathways. The Department for Education (DfE) has introduced a targeted package of financial incentives to make recruiting young people into the education sector more accessible and cost-effective:
- All employers:
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The DfE have introduced a cash incentive of up to £3,000 for hiring an apprentice aged 16-24 that has been on Universal Credit for 6 months
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£1,000 payment for hiring apprentices aged between 16-18 (19-24 with EHCP or care leavers)
- £2,000 foundation apprenticeship incentive for hiring apprentices ages between 16-21 (22-24 for apprentices with an EHCP, care leavers, or prisoners or prison leavers)
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Apprenticeship planning checklist for levy paying schools and settings
Review your levy funds
- Review your levy account balance and identify any funds due to expire.
- Forecast apprenticeship starts over the next 12 months.
- Agree who can approve apprenticeship starts and at what stage approval is required.
Decide priorities
- Identify workforce challenges that apprenticeships could help address.
- Prioritise roles where apprenticeships can support recruitment and retention.
- Agree which cohorts should be the focus of investment for the year.
Frequently Asked Questions
Formally known as the Apprenticeship levy, the Growth and Skills levy is a government initiative designed to tackle youth unemployment and expand pathways into meaningful work. The new framework fundamentally reshapes how training funds are distributed across England's workforce.
The majority of the changes for the Apprenticeship Levy come into place from 1st August, 2026. The £2,000 incentive for recruiting new apprentices aged 16–24 will start in October 2026.
If your school or setting spends all of their levy but they still want to put employees on an apprenticeship, they will need to pay a 25% contribution towards the apprenticeship cost, with the government paying the remaining 75%.
Yes, there is funding available for non-levy paying schools and settings. The government has removed co-investment costs entirely for apprentices aged 16 to 24 from non-levy paying settings. For adult learners aged 25 and over, the co-investment rate remains at 5%, with the government paying the remaining 95%.