The Apprenticeship Levy is still in effect in 2026 and it’s evolving. With new rules, increased flexibility, and growing opportunities to upskill your workforce, the question is no longer “Will it work?” but “Are you ready to make it work for you?”

Whether you’re a large Levy-paying organisation or a SME looking to unlock government funding, this guide will show you how to turn the Apprenticeship Levy into a strategic talent advantage.

What Is the Apprenticeship Levy?

Introduced in 2017, the Apprenticeship Levy remains a key funding mechanism for skills development in the UK. If your business has am annual pay bill over £3 million, you contribute 0.5% of your annual wage bill (minus a £15,000 allowance), paid monthly via PAYE. Funds must be used within 24 months or they are reallocated to other employers to support with their apprenticeship programmes.

If you’re not a Levy-paying employer, you can still receive up to 95% funding support for eligible apprenticeships.

What’s New?

Shorter Duration

Apprenticeships now start from 8 months (down from 12), offering faster development pathways without sacrificing quality.

Level 7 Apprenticeships

Funding for new starters over the age of 22 will cease for Level 7 apprenticeships from January 2026. Those who have already began their apprenticeships before January 2026 will still continue to receive funding.

Training costs covered for small and mid-size employers

Smaller businesses who do not pay the levy will now have training costs fully funded for apprentices under age 25.

Foundation Apprenticeships

Employers can use Levy funding for foundation-level programmes, ideal for entry-level roles and early upskilling to meet employers skills need.

Shorter expiry & removal of 10% top up

Employers will now have 12 months to use their levy, instead of the previous 24 months. The government’s monthly contribution will also cease from April 2026, so therefore employers will have access to only their own contributions.

Introduction of Growth and Skills Levy

The UK government has signalled a shift towards a broader Growth and Skills Levy, with the first step being an introduction of new foundation apprenticeships.

Training for Existing Staff and Graduates

You can use the Levy to upskill existing employees, to help build new knowledge and skills that they can use within their role.

What Can You Spend Your Levy On?

Eligible Levy spending includes:

• Approved apprenticeship standards and training
• End-point assessment fees
• Digital apprenticeships and virtual learning