On 16 March 2026, the Government announced a significant package of reforms to the Growth and Skills Levy, with major implications for how apprenticeships are funded when employers exhaust their levy funds. These changes form part of the wider £900m expansion of the Youth Guarantee and a shift in national priorities toward supporting younger learners aged 16–24.
What’s Changing?
Currently, when a levy-paying employer uses up all available levy funds, the Government covers 95% of the apprenticeship training and assessment costs, with employers paying the remaining 5%.
From 1 August 2026, this will change.
Under the new rules:
The Government will contribute 75% of the costs
Employers will be responsible for the remaining 25%
This revised co investment rate applies only to new apprentices starting from August 2026 onwards, once levy funds have been exhausted.
Critically, any apprentices already on programme before August 2026 will continue to benefit from the existing 95% Government contribution, even if the employer runs out of levy funds later. This provides some protection for ongoing cohorts, but employers planning new starts in late 2026 and beyond should prepare for higher out-of-pocket costs.
Why Is This Changing?
The Government aims to rebalance apprenticeship investment toward:
Young people aged 16–24
Priority skills areas
Sectors facing acute labour shortages
Employers with limited access to training funds
This reflects a broader strategy to reverse the long-term decline in young apprenticeship starts and ensure that public funding is directed towards early career development rather than upskilling established employees.
What Should Employers Do Now?
We recommend that levy-paying employers:
1. Review projected levy usage for the next 12–24 months
-Understanding when you’re likely to exhaust your levy is now essential.
2. Reassess apprenticeship workforce plans for 2026–27
-Higher co investment costs may influence which programmes you choose, cohort sizes, and preferred start dates.
3. Prioritise early-career opportunities
-Given the Government shift, apprenticeships for 16–24-year-olds remain the most strongly supported route.
4. Explore alternative development options
-Where leadership and management apprenticeships are affected by funding removal, diplomas and professional development pathways may fill the gap.
5. Speak to Linden for guidance
-We can analyse your levy projections, help eliminate unnecessary expiry, and ensure your investment is used in the smartest possible way.
How Linden Can Support You
At Linden, we remain committed to helping employers navigate these reforms smoothly. Whether you need support reallocating your levy, planning early starts before the changes, or redesigning programmes impacted by funding withdrawal, we’re here to help.
If you’d like a personalised levy impact review, please get in touch with our team.
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