As you may have seen, the recent Budget includes several major updates to the apprenticeship system. These changes are designed to increase opportunities for young people, support growth across key sectors, and simplify the way employers engage with apprenticeships. I wanted to share a clear overview of what’s coming, what it means for you, and how we’ll work with you to make the most of it.
Changes to levy funding and expiry rules
The government has confirmed a major shift to how levy funds can be used, with unused funds now expiring after 12 months instead of 24. This tighter window means levy-paying employers will need to plan and commit their training spend more quickly to avoid losing access to funding.
This means that from April 2026:
· Levy funds will automatically expire after 12 months, reducing the time available to use them.
· The 10% government top-up on levy payments will be removed. Once levy funds are exhausted, employers will contribute 25% to training costs (instead of 5%).
· Effective levy forecasting and timely commitments will become essential to avoid losing available funds.
For you, this will make early planning and clear scheduling of apprenticeship starts more important than ever, helping you maximise the value of your levy before it expires.
Fully-funded training for under-25 apprentices in SMEs
One of the most significant announcements is that apprenticeship training and assessment for apprentices aged under 25 in SMEs will be fully funded by the government.
This means that from next year:
· SMEs will no longer need to pay the 5% co-investment contribution for 22–24 year-olds.
· Training costs for under-25s in small and medium organisations will be covered entirely.
· The financial barrier to taking on younger apprentices will be substantially reduced.
For you, this should create a clearer and more accessible route to growing junior talent in your organisation.
Structural reforms planned for April 2026
Alongside funding changes, the government set out proposals to modernise apprenticeships.
These include:
· A new option to deliver shorter, modular apprenticeship units rather than only full programmes.
· A redesign of how levy funding operates, including a shorter window before unspent funds expire (This will be 12 months instead of 24)
· Adjustments to how large employers co-invest once levy funds are used up.
The intention is to create a more flexible and responsive skills system that better reflects the current labour market.
The finer details of the new units will not be confirmed until next year. Once the government sets out the full framework, we will provide guidance on how these options can support workforce development for your organisation.
Taken together, these changes signal a clear shift towards a more agile and focused apprenticeship system, with tighter controls on levy use, new opportunities for SMEs, and a move towards more flexible training options from 2026. While the changes will require employers to plan and act more quickly, particularly around levy spend, they also open up new ways to develop talent and strengthen early-career pathways. If you need support navigating the new rules, exploring levy gifting opportunities, or accessing additional levy funds from partner organisations, we’re here to help and can work with you to make sure your organisation continues to benefit fully from the apprenticeship system.
