NEW Employer Guide to Apprenticeships and the new 'Growth and Skills' Levy 

The Growth and Skills Levy is a UK tax on large employers which is used to fund apprenticeship training. It is payable by all employers with an annual pay bill of more than £3 million, at a rate of 0.5% of their total. The levy is paid into a central digital apprenticeship service (DAS) that employers can access. Funding is available for both new and existing employees and the training must be delivered by an approved training provider.

This fund is a new version of the previously used Apprenticeship Levy. The aim of the new levy is to provide a more flexible offer to employers and learners. The Growth and Skills levy claims to help people learn new, relevant high-quality skills at work and fuel innovation in businesses across the country.

While the Growth and Skills Levy maintains some similarities to the Apprenticeship Levy, particularly in its cost and how it is paid, there are several key differences introduced. These include:

• Flexibility & Scope: the new levy allows employers to fund shorter, targeted “modular” training courses to fill specific skill gaps, whereas the old levy was largely restricted to full, long-term apprenticeships.
• Training Options: the Growth & Skills Levy introduces “apprenticeship units” (30–140 hours), which allow for faster upskilling compared to the minimum 12-month requirement of the old system.
• Fund Expiry: funds will now expire in 12 months instead of the previous 24-month period, requiring faster utilisation.
• Level 7 Restrictions: from April 2026, levy funds cannot be used to fund new apprenticeships at Level 7 (master’s level) for individuals aged 22 and over.
• Foundation Apprenticeships: the new system introduces foundation apprenticeships designed to help younger workers start their careers.
• Co-investment: the government’s co-investment rate for training costs (when levy funds run out) changes to 25%, aiming to encourage more direct investment from businesses.

The UK government has recently introduced significant reforms to the apprenticeship system to enhance workforce development and address skills shortages.

Key changes include:

1. Autumn Budget 2025 Changes Affecting Levy Usage
• The 10% government top-up on levy funds will be removed from mid-2026.
•  Levy funds will have a 12-month spending window before expiry, rather than being available indefinitely — meaning unused balances could be lost sooner if not planned.

2. Enhanced Flexibility in Training Requirements
English and Maths Requirements: For apprentices aged over 19, employers now have the discretion to decide whether Level 2 English and maths qualifications are required, addressing previous barriers to apprenticeship completion.

3. Shortened Apprenticeship Durations
The minimum apprenticeship duration has been reduced from 12 to 8 months for some occupations, effective from August 2025. 

4. Levy Transfer (Gifting) and Strategic Use of Unused Funds
•  Levy-paying employers can now transfer up to 50% of unused funds to other businesses or organisations — up from 25%.
• This can be a strategic tool for MATs or large employers to support local partners, supply chains, or sector initiatives

LMP Education provides a free recruitment service and levy strategy support for organisations looking to bring in apprentices. We’re here to make the process as simple and rewarding as possible — so you can focus on nurturing new talent and strengthening your team.

As soon as your role is posted, LMP Education will carefully screen applicants for eligibility and invite suitable candidates to complete an application form. We will support you through the candidate selection supplying you with candidate bios, CVs, and completed applications to review. Once a shortlist is selected, we will help facilitate the interviewing process.

Once you’ve found the perfect match, let us know! We’ll guide you and your new apprentice through the onboarding process, making sure everything is set up for success.

Once your apprentice starts their role, and their apprenticeship enrolment is finalised the LMP Education Team will still be with you every step of the way, providing ongoing support until your apprentice successfully completes their programme.