In 2025, the UK government introduced significant changes to the Apprenticeship Levy. The Minister for Skills, Apprenticeships and Higher Education, Robert Halfon MP, confirmed the formal renaming of the levy, which takes effect from April 2025. Now called the Growth and Skills Levy, the updated version aims to give employers more flexibility and control over their training budgets.
The changes give employers the freedom to fund a wider mix of training programmes tailored to their business’s specific skills needs.
What is the Growth and Skills Levy?
The Growth and Skills Levy applies to employers with a wage bill over £3 million a year. These employers pay 0.5% of their total payroll into a training fund via HMRC, which they can access through the Apprenticeship Service.
What can it be spent on?
The levy is being reformed to fund a wider range of training: From April 2025, levy funding will support a wider range of training options.
In a recent parliamentary debate, the Minister confirmed that from April 2025, 50% of levy funds must still be used for apprenticeships, while the remaining 50% can be directed towards other approved training, such as Skills Bootcamps and modular technical courses.
What’s Changing in 2025?
As announced in the 2024 Autumn Statement, the levy reforms will also:
- Support more flexible training options, not just full apprenticeships.
- Target funding towards closing regional skills gaps, based on local economic needs.
- Encourage investment in younger workers and early-career roles over senior staff-only training.
"The Growth and Skills Levy will ensure that our apprenticeships system works not only for young people and the regions but for businesses who need fast, flexible, local training options to grow the skills that matter most." — Robert Halfon MP, Hansard, 4 Feb 2025
Other changes that are under consideration include:
- Some Level 7 apprenticeships may lose levy eligibility; this is pending review.
- The mandatory English and maths requirement has been removed for learners aged 19+ at the start of their apprenticeship, providing there is employer agreement.
- Shorter apprenticeships and Foundation Apprenticeships are being explored, with pilots due to launch from August 2025, subject to legal changes.
Skills England is currently consulting with employers in key sectors such as construction, health and social care, and manufacturing to prioritise eligible training under the new framework.
It’s important to note that some details, including which short courses and providers will be approved, are still being finalised. Final funding guidance is expected by late spring 2025.
Who Pays the Levy, and Who Doesn’t?
There’s no change to who contributes:
- Large employers (payroll over £3 million): pay into the levy and use the Apprenticeship Service to manage funds.
- Small and medium-sized employers (payroll under £3 million): don’t pay into the levy but can still access government funding for apprenticeships.
What If I’m a Small Employer?
Concerns about complexity of apprenticeship funding were raised in Parliament, and the government confirmed that the Apprenticeship Service is being simplified for smaller businesses.
Here’s how funding works:
- The government funds 95% of the apprenticeship training cost for non-levy employers. So if the apprenticeship programme costs £11,000 your business pays just £550 (5%).
- For apprentices aged 16 to 21, the government will now fund 100% of the cost.
- You must reserve your funding in your Apprenticeship Service account before the apprentice starts. It’s quick to set up, and your training provider can help you through the steps.
You may also be eligible for a £1,000 incentive if your apprentice is:
- Aged 16–18
Aged 19–24 with an Education, Health and Care Plan (EHCP)
A care leaver
How Do I Find an Apprentice?
Apprenticeships are ideal for upskilling existing employees. If you want to grow a future manager or develop digital or marketing skills internally, funding can still apply as long as the role and training meet the criteria.
There are a few routes you can take to find a new employee to take on as an apprentice:
- Post on the ‘Find an Apprenticeship’ site (the official gov.uk jobs board).
- Ask your training provider as many offer free recruitment support and can help you shortlist candidates.
- Use local networks such as schools, job centres, and colleges, these organisations often have strong candidate pipelines
Don’t forget, apprentices must have a proper employment contract and be paid at least the National Minimum Wage for apprentices. The training must be completed during their working week.
Can I Use Levy Funding From Bigger Employers?
Levy-paying employers can transfer 25-50% of their unused funds to other organisations.
This could mean:
- 100% of your training costs covered
- Support for multiple apprentices
Some local authorities and business networks run levy transfer matching schemes or maintain directories where small employers can register their interest in receiving transferred funds. It’s worth checking with your regional LEP or combined authority. Levy-paying providers also now have greater flexibility to use these transferred funds to deliver training, making it easier to support collaborative training arrangements with smaller businesses.
Can I Train My Existing Team Using The Levy?
Absolutely. Many businesses use apprenticeships to develop their current employees especially in:
- First-line management
- Marketing roles
- Team leadership
- Customer experience
As long as the training aligns with an approved apprenticeship standard and the staff member is gaining substantive new skills, it qualifies.
So What’s Next For Apprenticeships?
We’re still waiting for final confirmation from Skills England on:
- Which short courses and providers will be eligible.
- What will be classed as regional priority skills.
- Whether Level 7 apprenticeships will remain eligible for levy funding.
New options are expected to launch from August 2025 at the earliest, with more details confirmed in spring 2025.
If you’re an employer thinking about how to build your team or develop internal talent, now’s a good time to explore your options. You don’t need to wait for the changes to kick in, you can still fund apprenticeships now, and it’s a good time to get the process started.
Ascento specialises in marketing, management, and leadership apprenticeships. We work with employers across sectors to help you make the most of the funding available, whether you’re just starting out or looking to develop your future leaders.
