The apprenticeship funding landscape in England is undergoing its biggest change in a decade with the transition from the old Apprenticeship Levy to the new Growth and Skills Levy from April 2026.
What Is the Growth and Skills Levy?
The Growth and Skills Levy replaces the Apprenticeship Levy, but keeps the same basic structure:
- Employers with a UK payroll over £3 million will continue to pay 0.5% of their total pay bill into a central skills fund.
- However, unlike before, employers will have greater flexibility in how these funds are used to develop skills, not just for full apprenticeship programmes.
The new system has been introduced because apprenticeship starts had declined significantly since the original levy began, and because employers and government recognised the need for a more responsive, skills-focused funding model.
This represents a major shift in how employers invest in workforce training and apprenticeships, driven by government reforms designed to boost skills, reduce barriers to training and support economic growth.
Key Changes Under the Growth and Skills Levy
Flexible Use of Levy Funds
Under the Growth and Skills Levy, employers can spend their funds on a wider range of training:
- Short courses and modular programmes, often called apprenticeship units.
- Targeted upskilling or reskilling, based on business needs.
- Foundation apprenticeships and other targeted programmes, offering pathways into work for young people.
This shift encourages employers to focus on specific skills gaps, such as digital, AI, technical and leadership skills, without committing to a full multi-year apprenticeship every time.
Modular Apprenticeship Units
From April 2026, funds will be able to pay for apprenticeship units - short, focused segments of apprenticeship standards that can be combined over time. These are ideal for employers who want to develop targeted competencies quickly while still progressing towards full apprenticeship credentials.
Changes to Funding Terms
The way levy funds are used and managed has changed:
- Levy fund expiry is now 12 months instead of 24 months, requiring employers to plan spend more actively.
- The 10% government top-up to levy funds has been removed, so employers now use the exact value they pay in.
- Once levy funds are exhausted, employers must co-invest 25% towards training costs (previously 5% for non-levy employers) for apprenticeships.
These changes encourage employers to think strategically about skills development and financial planning, linking investment with workforce goals.
Continued SME Support
Despite larger employers being the primary contributors to the levy, the government is maintaining support for smaller employers:
- Full funding for apprentices aged under 25 hired by SMEs, continuing recent co-investment waivers and expanding access.
- Additional funding and initiatives in partnership with local authorities to connect young jobseekers with opportunities.
Why This Matters for Employers
The Growth and Skills Levy empowers businesses to:
- Deliver more responsive training that reflects real-world skills needs.
- Recruit and retain talent through qualifications that align with business strategy.
- Reduce barriers to entry for young people and those changing careers.
For employers planning for 2026 and beyond, early engagement with the Growth and Skills Levy will be key. Planning now, including auditing current digital funds, identifying priority skill areas and working with approved training providers - positions organisations to maximise this new funding model.
Government Support and Broader Funding Context
In addition to the levy reform, the UK Government has committed £725 million in funding to support apprenticeships and skills development, which includes backing new training opportunities and boosting local partnerships to create over 50,000 more apprenticeships for young people.
These investments reflect a broader policy shift to tackle unemployment, strengthen local economic opportunities and equip the workforce with future-ready skills.
How Solveway Apprenticeships Can Help
At Solveway Apprenticeships, we guide employers through every step of leveraging the Growth and Skills Levy for growth and skills development. Whether you are recruiting your first apprentice, building a bespoke training pathway, or planning modular upskilling for existing colleagues, we have the expertise and practical support to help you make the most of the new funding framework.
Get in touch with our team today to discuss how the Growth and Skills Levy can work for your business and workforce strategy.
Frequently Asked Questions
Unlock Your Apprenticeship Funding and Grow Your Team in 2026
From recruitment support to onboarding, compliance and ongoing progress reviews, our team provides clear advice and hands-on support at every stage. Visit our Employer Section to explore funding guidance, programme information and how we can support your workforce development strategy in 2026 and beyond.