The Growth and Skills Levy: What Employers Need to Know

The apprenticeship system is changing—and for employers, this brings new opportunities as well as new decisions.

The government is transforming the Apprenticeship Levy into the Growth and Skills Levy. The aim is to give employers greater flexibility, create more opportunities for young people and help businesses develop the skills they need for the future.

Full apprenticeships will continue to offer a powerful way to recruit new talent, develop existing employees, address skills gaps and build a strong internal talent pipeline. However, employers will also have access to a wider range of apprenticeship products, including shorter apprenticeship units in approved occupational areas.

So, what is changing—and what does your organisation need to know?

The key changes at a glance

• Approved apprenticeship units will provide shorter, more focused training.
• Foundation apprenticeships will help more young people take their first steps into employment.
• The minimum practical period for an apprenticeship has reduced from 12 months to eight months.
• English and maths requirements are more flexible for apprentices aged 19 and over.
• Government funding for new Level 7 apprenticeships is more restricted.
• The 10% government top-up for levy accounts has been removed for new funds.
• Co-investment arrangements now depend on the apprentice’s age and whether the employer pays the levy.
• Levy-paying employers can transfer up to 50% of their annual levy funds to other organisations.

What is the Growth and Skills Levy?

The Growth and Skills Levy is the name being used for the reformed apprenticeship funding system.

Employers with an annual pay bill of more than £3 million will continue to pay the levy at a rate of 0.5% of their annual pay bill, minus the annual £15,000 levy allowance. Payments are made monthly through PAYE.

The money available for apprenticeship training is managed through the employer’s apprenticeship service account. Employers can use their available funds to pay for eligible apprenticeship training and assessment, up to the maximum funding band for their chosen apprenticeship.

Apprenticeships can help employers to:

• Recruit and develop new employees.
• Upskill or retrain existing team members.
• Develop future managers and leaders.
• Address occupational and technical skills gaps.
• Support workforce and succession planning.
• Improve employee engagement, progression and retention.

Apprenticeships are not only for new recruits. An existing employee can also undertake an apprenticeship, provided the programme develops substantial new occupational knowledge, skills and behaviours and meets the relevant apprenticeship funding rules.

More flexibility through apprenticeship units

One of the most significant changes is the introduction of approved apprenticeship units. These are shorter, focused training programmes taken from full apprenticeship standards.

They will allow employers to respond to a specific skills need without always requiring an employee to complete an entire apprenticeship. This could be particularly valuable when targeted development is needed in areas such as digital skills, artificial intelligence, leadership or other occupational capabilities.

Only units that have been formally approved and made available through the Growth and Skills Levy can be funded. Their availability, eligibility criteria, duration and funding will depend on the individual unit.

Total Training Provision has been approved to deliver apprenticeship units in artificial intelligence and can work with employers to explore how these units could support their workforce.

A new starting point for young people

Foundation apprenticeships provide an entry route into key industries for young people who may not yet be ready to begin a full occupational apprenticeship.

By combining employment with structured training, foundation apprenticeships can help a young person build confidence, develop essential workplace skills and prepare for future progression.

They are currently available in areas including:

• Construction and the built environment.
• Engineering and manufacturing.
• Health and social care.
• Digital.
• Catering and hospitality.
• Retail, service, supply and administration.

Eligible employers may receive an incentive of up to £2,000 to support a young person undertaking a foundation apprenticeship.

Does an apprenticeship now last only eight months?

Not necessarily.

The statutory minimum practical period for an apprenticeship has reduced from 12 months to eight months, but this does not mean every apprenticeship will be completed within that time.

Each apprenticeship standard has its own expected duration and minimum off-the-job training requirement. The programme must still be long enough for the apprentice to develop full occupational competence.

The apprentice’s previous learning and experience must also be assessed before the programme begins. If they already have relevant knowledge or skills, the content, duration and price of the apprenticeship may need to be reduced.

What is changing with English and maths?

For apprentices aged 19 or over when they begin their apprenticeship, working towards separate English and maths qualifications is no longer automatically required in every case.

The employer and apprentice can decide whether the apprentice should work towards a standalone English or maths qualification. However, the training provider must still assess the apprentice’s starting point and discuss any development needs.

English and maths remain essential workplace skills and should continue to be developed where they are relevant to the apprentice’s role and programme.

They may also remain mandatory where they form an essential part of a required qualification or regulated occupation.

Different requirements continue to apply to apprentices aged 16–18.

New restrictions on Level 7 funding

For new starts under the 2026–27 funding rules, government apprenticeship funding for Level 7 apprenticeships is generally restricted to people who are:

• Aged 16–21 when they begin their apprenticeship; or
• Aged 22–24 and have an Education, Health and Care plan or experience of local-authority care.

This restriction applies to apprenticeships starting from 1 August 2026. It does not retrospectively remove funding from eligible apprentices who began their programme under earlier funding rules.

Where government apprenticeship funding is unavailable, employers may still choose to fund a Level 7 programme privately.

How levy funding is changing

The government top-up has been removed

The government previously added a 10% top-up to funds entering levy-paying employers’ apprenticeship service accounts.

From 1 August 2026, this top-up no longer applies to new funds entering levy accounts.

This makes it particularly important for employers to review their current levy balance and forecast future spending before committing to additional apprenticeship programmes.

What happens when levy funds run low?

For new apprenticeship starts from 1 August 2026, where a levy-paying employer does not have enough money in its apprenticeship service account:

• For apprentices aged 16–24, the government funds 100% of eligible training and assessment costs, up to the funding band maximum.
• For apprentices aged 25 or over, the employer contributes 25% and the government contributes 75%, up to the funding band maximum.

For employers that do not pay the levy:

• For apprentices aged 16–24, the government funds 100% of eligible training and assessment costs.
• For apprentices aged 25 or over, the employer normally contributes 5%, with the government funding the remaining 95%.

Any amount agreed above the apprenticeship funding band maximum must be paid in full by the employer.

Put unused levy funds to work

Levy-paying employers can transfer up to 50% of their annual levy funds to other organisations.

This can be a powerful way to create apprenticeship opportunities beyond your own workforce while supporting your wider business, sector or community goals.

A transfer could support organisations within your:

• Supply chain.
• Sector.
• Local community.
• Strategic partnership network.
• Priority geographical area.

Transferred funds can be used to pay for eligible apprenticeship training and assessment for a new apprenticeship start.

The apprentice can be an existing employee of the organisation receiving the transfer, but they must not normally have started the apprenticeship before the transfer is approved.

The transferring employer commits to funding that apprenticeship for its full duration, with payments leaving its account monthly. Employers should therefore forecast their own apprenticeship needs before making a long-term transfer commitment.

What financial support is available?

From 1 October 2026, eligible non-levy-paying employers may receive a hiring payment of up to £2,000 when recruiting a new apprentice aged 16–24, subject to the detailed funding rules.

Employers may also receive a separate £1,000 additional payment where an apprentice is:

• Aged 16–18 when they begin their apprenticeship.
• Aged 19–24 and has an Education, Health and Care plan.
• Aged 19–24 and has been in local-authority care.

Learning support funding may also be available. This can help a training provider put appropriate reasonable adjustments in place for an apprentice with a learning difficulty or disability.

Ten actions employers can take now

The new system makes careful apprenticeship planning more important than ever. To prepare, employers should:

1. Review the current balance in their apprenticeship service account.
2. Forecast how much funding will enter and leave the account.
3. Identify levy funds that may otherwise remain unused.
4. Map current and future skills gaps across the organisation.
5. Identify suitable roles for recruiting new apprentices.
6. Explore how existing employees could progress through apprenticeships.
7. Review the effect of the Level 7 funding restriction.
8. Consider approved apprenticeship units for targeted development.
9. Explore levy transfers that could support supply-chain or community partners.
10. Make sure managers can give apprentices time, mentoring and opportunities to apply their learning.

Turn apprenticeships into a workforce strategy

Apprenticeships can do much more than fill an entry-level vacancy.

When apprenticeship training is connected to wider organisational goals, it can help businesses to:

• Strengthen leadership and management capability.
• Introduce new digital and AI skills.
• Build succession pipelines.
• Improve productivity and service quality.
• Increase employee engagement and retention.
• Support employees to progress into more responsible roles.
• Create a more inclusive approach to professional development.

Apprenticeships can therefore provide both an effective recruitment route and a structured, cost-effective way to develop and retain the people already working within your organisation.

How Total Training Provision can help

Understanding the funding rules is only one part of creating a successful apprenticeship programme.

Total Training Provision can help you turn your workforce priorities into a practical recruitment, training and levy strategy.

Our support can include:

• Reviewing your workforce and skills needs.
• Identifying suitable apprenticeship standards and units.
• Developing an apprenticeship recruitment plan.
• Helping you set up and use your apprenticeship service account.
• Supporting applications for levy-transfer funding.
• Advertising apprenticeship vacancies.
• Screening applicants for suitability and eligibility.
• Providing candidate profiles and CVs.
• Supporting shortlisting and interview arrangements.
• Completing apprentice onboarding and initial assessment.
• Working with managers to tailor training to the employee’s role.
• Providing regular progress information throughout the programme.
• Preparing apprentices and employers for assessment and progression.

Our support continues after the apprentice starts.

We work with the apprentice, their manager and the wider organisation to monitor progress, identify support needs and help the apprentice put their learning into practice in the workplace.

Ready to explore your options?

Whether you are a levy-paying employer, an SME looking for government or levy-transfer funding, or an organisation interested in apprenticeship units, Total Training Provision can help you understand the opportunities available.

Contact our team to arrange a workforce and apprenticeship needs discussion—and discover how apprenticeships can support your organisation’s growth.

Funding rules and eligibility requirements may change. Employers should confirm the latest requirements before making funding or recruitment decisions.