Overview of Budget changes
Amidst the drama of the Autumn Budget, there were some major policy changes in relation to apprenticeships and skills. The beneficiaries of the changes were mostly SMEs and ultimately young people who are Not in Education Employment or Training. Levy paying employers will feel the brunt of the policy changes from 2026.
For SMEs:
check Apprenticeship training costs will be 100% funded for learners under 25 at SMEs.
Previously, SMEs received 100% funding for apprentices under 22, and 95% funding for apprentices 22 and over. So this change brings into scope 100% funding for apprentices aged 22-24. Note that Level 7 will not be funded as from 1 January 2026, and this new funding change for SMEs does not change that ruling.
Implementation date: August 2026.
For levy payers:
The Budget was less positive for levy paying businesses, through the change in funding policy as well as the threshold for paying of the levy not increasing from £3 million payroll a year.
close The shelf life of levy funds in an employer’s account will be cut from 24 months down to 12 months, at which point unused funds are returned to the Treasury. Note it’s only new funds from August 26 which will only have a 12 month life span, not funds already paid into the levy account before the implementation date in 2026.
close The levy uplift from the government of 10% after an employer had exhausted its own levy funds for apprenticeship training is being removed.
close The 95% co-investment for further apprenticeship training from government for employers who’d spent all their levy funds plus the 10% uplift will be reduced to 75% co-investment.
Implementation date: August 2026.
For all employers:
The Budget gave no detail on the much-anticipated Growth and Skills Levy Offer flexibility. As at 1 December 2025, we know that AI and Data short courses (which are being called 'apprenticeship units' by Skills England and DfE/DWP) will be part of the initial wave of flexibility.
What is contained in an apprenticeship unit and who is eligible to take them has yet to be confirmed by government. We will update this page once details are published.
check The apprenticeship minimum wage is increasing to £8 an hour.
Implementation date: April 2026.