New Growth and Skills Levy rules have reduced the time available to use employer account funds and increased the contribution required from levy-paying organisations once their balances are exhausted.
The changes took effect on 1 August and alter how money enters apprenticeship service accounts, how long new funds remain available, and how remaining training costs are divided between employers and government.
Under the previous system, the government added a 10% top-up to the notional funds entering levy-paying employers’ accounts each month. That top-up has now ended for new funds, although money credited on or before 31 July retains its existing value.
New funds will expire after 12 months rather than 24 months. Existing funds will continue to expire after 24 months, and the oldest balance will still be used first when employers pay for eligible training and assessment.
The shorter period gives employers less time to turn levy contributions into approved programmes. Recruitment forecasts, training-provider procurement, internal approvals, candidate selection, and programme start dates will need to be coordinated within a tighter cycle.
The co-investment rules have also changed. Once a levy-paying employer has exhausted its account, it will contribute 25% of eligible training and assessment costs for apprentices aged 25 and over. The previous employer contribution was 5%.
Government guidance illustrates the difference using a customer service apprenticeship with a £3,500 annual funding-band cost. Under the previous rate, the employer would have contributed £175 after its levy funds ran out. The contribution is now £875, with the government paying the remaining £2,625.
Eligible apprenticeship starts for people aged between 16 and 24 are fully funded. Levy-account funds will still be used first where they are available, but an employer will not face the 25% co-investment charge for an eligible apprentice in that age group after the account is depleted.
The distinction will affect workforce planning. Employers with a significant intake of younger apprentices may be insulated from part of the cost increase, while programmes aimed at experienced employees could become materially more expensive once account funds have been used.
The rules apply across the broader Growth and Skills Levy offer, which now covers conventional apprenticeships, foundation apprenticeships, and shorter apprenticeship units.
Foundation apprenticeships provide paid, structured entry-level training for eligible 16-to-24-year-olds in areas including construction, engineering and manufacturing, health and social care, digital work, hospitality, retail, and administration.
Apprenticeship units are shorter courses for existing employees aged 19 and over. The first units focus on areas including AI strategy, AI governance, battery manufacturing, electric vehicle charging, modular construction, solar installation, and welding.
That broader offer gives employers more ways to use levy funds, but it also increases the number of programmes competing for the same account balance. Finance and workforce teams will need to decide which training should be delivered through a full apprenticeship and which requirements can be met through shorter units.
Levy-paying employers can transfer up to 50% of their funds to other organisations, including smaller companies, charities, and flexi-job apprenticeship agencies. Transfers may become more important as account balances begin expiring after 12 months, particularly where a large employer cannot use its full allocation internally.
Transfers require forward planning. A receiving organisation needs an apprenticeship service account, an eligible programme, an approved provider, and an employee ready to begin. Waiting until funds are close to expiry may leave insufficient time to complete those arrangements.
The government has added separate incentives for recruiting younger people. Employers can access a further £3,000 through the Youth Jobs Grant when an apprentice is aged between 18 and 24 and has received Universal Credit for more than six months.
From October, non-levy-paying employers will also be able to receive up to £2,000 when recruiting eligible apprentices aged between 16 and 24, provided the apprentice starts from 1 October and joined the employer within the preceding three months.
The funding changes coincide with a wider revision of the apprenticeship system. Adult apprentices who were aged 19 or over when they began training are no longer required to hold or achieve separate English and maths qualifications before completing their programme. Instead, those capabilities can be demonstrated through workplace tasks, although funded qualifications remain available where the employer agrees they are needed.
The minimum apprenticeship duration was reduced from 12 months to eight months in August 2025 where the shorter period is sufficient to establish occupational competence. Assessment plans are also being revised to remove duplication and allow more assessment during the programme.
Funding will be withdrawn from 16 apprenticeship standards from September, including the Level 6 Chartered Manager, Level 5 Operations Manager, and Level 3 Team Leader programmes. Existing learners will remain funded through to completion.
Those withdrawals will require some employers to reconsider management-development plans that previously relied on apprenticeship funding. The government’s stated direction is to concentrate more support on younger people, entry routes, and occupations aligned with critical skills needs.
Crimson’s expansion of its regional AI apprenticeship pipeline illustrates how employers are using structured programmes to develop data and automation capability that remains difficult to recruit externally.
Programmes of that kind depend on more than the availability of levy funds. Employers need suitable roles, management capacity, supervised project work, provider quality, and credible progression after completion. The shorter account-expiry period increases the pressure to make decisions quickly, but poorly designed programmes can create costs without resolving the underlying skills requirement.
The revised system combines stronger support for younger recruits with less generous account treatment for levy-paying employers. Organisations that forecast demand, approve programmes early, and monitor balances closely will have more scope to use their contributions before they expire. Those that treat the levy as a passive reserve face a greater risk of losing account value and paying a larger share of later training costs.
You must be logged in to post a comment.