Understanding the Latest Changes to Apprenticeship Funding for Every Business in England

Apprenticeships Made Simple

 

Employers have often shied away from apprenticeship levy funding because it seems too complicated and onerous, and between changing government rules, confusing jargon, and different schemes for levy and non-levy payers, it’s easy to feel lost.

That’s why we’ve created this guide to the Growth & Skills Levy, to cut through the complexity and explain, in straightforward and easy-to-digest terms, how the Apprenticeship Levy works in 2025/26. Once you’ve finished reading, you’ll understand what’s changed and how your business can make the most of it.

Whether you’re a large levy-paying organisation or a growing SME, apprenticeships remain one of the most efficient ways to develop your workforce, boost retention, and reduce recruitment costs. With the latest updates, introduced to slash red tape and boost growth, they’re simpler and more flexible than ever.

Now is the perfect time to review how your business uses apprenticeships or to explore them for the first time, and make sure none of your training budget goes to waste.

1. Levy Changes 2025

The Government announced several key updates to apprenticeship funding and training rules, which came into force in August 2025. One significant change is the rebranding from Apprenticeship Levy to the Growth & Skills Levy. The changes are designed to make programmes more consistent, predictable, and business-friendly.

With the intention of making apprenticeships easier to understand and more accessible for both large and small businesses, the biggest change has been removing the 20% off-the-job training requirement. This has been replaced by a fixed minimum of training hours per apprenticeship standard.

What this means in practice is you no longer have to figure out what counts as 20% of an apprentice’s working week and can adopt a clearer, more standardised approach for every programme.

For example, a Level 3 Business Administrator apprenticeship now has a fixed minimum number of guided learning hours, agreed nationally. This helps you plan workload, supervision, and scheduling more accurately.

What else to know: Fixed hours are attached to each standard, so planning becomes simpler at the point of enrolment. Progress is evidenced against those hours using your provider’s digital system, and reviews are scheduled at set points, which helps managers keep momentum without last-minute scrambles.

For practical examples of activities that count toward off-the-job training hours, see Appendix A: Examples of Off-the-Job Training Activities at the end of this guide.

2. Understanding The New Rules: Growth and Skills Levy Funding Explained

The cost of an apprenticeship is naturally a key factor in your decision on whether or not to go ahead. Here, we’ve broken down the growth and skills levy (apprenticeship levy before) for employers so you can see exactly how it works:

Levy-Paying Employers

If your business has an annual payroll over £3 million, you pay 0.5% of that into the Growth & Skills Levy, collected monthly through PAYE. You can then use those funds to pay for apprenticeship training and assessment for new or existing staff through your digital apprenticeship service account.

If you don’t use the funds within 24 months, they expire and return to the Treasury. In essence, if you’re not taking on apprentices, you’re losing money that could have funded staff training. There are discussions underway to reduce this utilisation period to 12 months, and if adopted, this creates more pressure to utilise your funding sooner rather than later!

Tip: Ring-fence priority roles (for example, team leader, project manager, data technician) and create a rolling plan so expiring funds are always matched to upcoming starts. Many employers also set a quarterly internal review to prevent “use it or lose it”.

Non-Levy Employers

Smaller businesses that don’t pay the levy can still benefit from 95% to 100% funded training. The Government covers the majority of the costs, and in some cases, large employers can transfer up to 50% of their unused levy funds to help SMEs in their supply chain.

In short:

Levy payers: Use it or lose it

Non-levy payers: Almost everything is covered for you

By learning how to use the growth and skills levy for your benefit and making the most of the funds available to you, every business can use apprenticeships to unlock fully funded workforce development.

Simple costing examples:

• A £5,000 standard for an SME on 95% funding means the employer contribution is £250 paid in instalments; the Government covers £4,750
• A levy payer draws the full £5,000 from its levy pot. If the pot is low, co-investment mechanisms apply, so the programme still proceeds

3. Myths vs Reality

There are still plenty of misconceptions about apprenticeships, which are potentially preventing employers and their staff from benefiting from the help available.

Myth 1: Apprenticeships Are Just For School Leavers

The reality is they’re for everyone, from entry-level staff to senior leaders. You can upskill existing employees through programmes in management, digital, finance, energy, sustainability and more, with entry-level apprenticeships right through to degree-level options.

Apprenticeships are available across seven levels, aligned with educational equivalents:

• Level 2 (Intermediate) - Equivalent to GCSEs, ideal for entry-level roles and support staff
• Level 3 (Advanced) - Equivalent to A Levels, suited to skilled operational or administrative roles
• Level 4–5 (Higher) - Equivalent to a foundation degree or HNC/HND, covering technical and supervisory positions
• Level 6 (Degree) - Equivalent to a full bachelor’s degree, popular for management, engineering and digital roles
• Level 7 (Master’s) - Equivalent to a postgraduate qualification, often used for senior leadership, strategic management and professional specialists

This tiered system means you can build clear career pathways within your organisation. For example, an employee might start at Level 3 in team leadership and progress to a Level 7 Senior Leader apprenticeship over several years, all fully or mostly funded.

Myth 2: It’s Too Much Admin

The system for apprenticeship funding in England is now almost entirely digital. Enrolments, funding claims and tracking are all managed online, with support from your training provider, which minimises the time you need to spend taking care of the details.

Myth 3: It’s Not For Senior Roles

There are now high-level apprenticeships, including Level 6 and 7 (equivalent to degree and master’s level), covering leadership, business improvement, and technical specialisms. They take between eighteen months and six years to complete, but not only do you keep a skilled and productive member of your workforce, but it can also cut your overall training costs too.

Apprenticeships may have once been seen merely as a way to train new recruits, but the transformation they’ve undergone in the last 20 years means they’re ideal for everyone. As an employer, they can help you build future-ready teams and retain great people.

4. The Business Benefits of Using Your Levy

The numbers speak for themselves. Employers who actively use the growth and skills levy typically see:

• Higher staff retention: According to a report by the National Apprenticeship Service, 69% of employers report greater employee retention, with 65% of apprentices staying in the company once training is complete.
• Improved productivity: Skills are developed around your real business needs, hence why 74% of employers say having apprentices has improved product or service quality. Additionally, 78% report improved productivity.
• Reduced recruitment costs: Developing skills within your existing talent pool saves on recruitment costs and the amount of time spent recruiting, according to Kaplan. With the Chartered Institute of Personnel and Development estimating the average cost to recruit an employee at £1,500 and £2,000 for senior managers, the savings you make by opting for an apprenticeship for an existing employee can be substantial.
• Enhanced reputation: Apprenticeships show you believe in investing in your employees and nurturing their talent. This, in turn, can lead to improved staff loyalty and higher retention rates.

At a time when skills shortages are hitting every sector, apprenticeships offer a ready-made solution, fully or mostly funded by the government, and tailored to your business.

We’ve seen employers use levy funds to support:

• Supervisors stepping up to management roles
• Engineers cross-training in sustainability or renewable energy
• HR and operations teams gaining new leadership qualifications

Real-world quick win: Map one hard-to-fill vacancy (for example, shift supervisor) to a relevant standard, nominate two promising internal candidates and start one cohort per quarter. Within six to nine months, you’ll have measurable improvements in leadership behaviours and a live succession pipeline.

5. Next Steps: How To Use The Growth and Skills Levy And Make It Work for You

If you’re not currently using your levy, or if you’re unsure how to get started, you’re not alone. Millions of pounds go unclaimed every year simply because employers don’t know what’s available.

That’s where we can help.

At Impact Academy, we make apprenticeships simple, strategic and tailored to your goals. Whether you’re managing your own levy account or accessing funding as a smaller employer, we’ll help you get access to government-funded training in the UK, show you exactly how to use your funds effectively, ensure programmes align with your workforce needs and help you enrol, manage and measure success with minimal admin.

A Simple 6-Step Pathway

Identify roles & skills gaps: Link business goals to apprenticeship standards

Check funding route: Levy balance, co-investment or a levy transfer partner

Create a start schedule: Protect starts against levy expiry dates

Onboard apprentices: Digital enrolment, learning plan, manager briefing

Review & support: Fixed-hour progress reviews, on-the-job projects

Measure outcomes: Retention, promotion, productivity, time-to-competence

Quick Employer Checklist

• Do we have levy funds expiring in the next six to 12 months?
• Which standards match our hard-to-recruit roles?
• Who are our internal candidates for upskilling?
• What line-manager time is needed for reviews and mentoring?
• What business metrics will we track (retention, output, quality)?

Book your free 30-minute consultation with Debbie today. You’ll get clear, expert advice, practical next steps, and a funding action plan designed around your business.

Appendix A: Examples of “Off-the-Job” Training Activities

Under the Growth & Skills Levy, employers must record a fixed number of training hours for each apprenticeship standard.
Examples of valid activities include:

• Attending live online workshops or webinars.
  
  
• Completing e-learning modules or research assignments.
  
  
• Working on projects linked to the apprenticeship standard.
  
  
• Job shadowing or mentoring sessions.
  
  
• Taking part in professional discussions or simulations.
  
  
• Writing reflective logs or preparing for assessments.

(These activities take place during paid working hours but are outside normal day-to-day duties.)

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