Use It or Lose It: Apprenticeship Levy Funds reducing to a 12-Month Clock

Yesterday’s Autumn Budget introduced a series of important changes to the apprenticeship system, some tightening existing rules, others creating new opportunities for employers and learners. I have outlined the key updates below which will shape how you plan and invest in skills development as we move into the coming years. Here’s what you need to know:

1. Removal of the 10% Levy Top-Up

The 10% top-up for levy-paying employers is being scrapped. Previously, £1m of levy allocation translated into £1.1m of virtual credit. Its removal reduces the purchasing power of levy funds, so employers will need to plan budgets without this additional buffer.

2. Levy Funds Expire Faster

Levy funds in digital accounts will now expire after 12 months (down from 24). This “use it or lose it” approach means tighter timelines for allocating funds effectively.

3. Co-Investment Becomes Less Generous

Once levy funds are exhausted, co-investment terms shift to 75:25 (employer:government), replacing the previous 95:5 split. This will increase costs for employers investing beyond their levy contributions.

4. Fully Funded Apprenticeships for Under-25s in SMEs

Non-levy paying employers will now receive fully funded training and assessment for apprentices aged 25 or under (previously under 22). This removes the administrative burden of co-investment and supports early-career talent development.

5. Streamlining Apprenticeship Standards

The government plans to “streamline” the 700+ apprenticeship standards, many of which have had zero starts. Expect a leaner set of standards and the introduction of apprenticeship units from April 2026, offering more modular training options.

6. Minimum Apprentice Wage Increase

From April 2026, the minimum wage for apprentices (under 19 or in their first year) will rise to £8.00 per hour, up from £7.55. Other increases include:

7. Youth Guarantee

The government has committed £820 million over three years to fund a new Youth Guarantee. This guarantees every young person aged 18–21 a place in college, an apprenticeship, or personalised job support. After 18 months of unemployment, they will be offered a paid work placement, not benefits. This is a significant step toward tackling youth unemployment and creating a stronger talent pipeline.

Our Advice

If you’d like to explore how these changes could impact your organisation, or identify apprenticeship opportunities that align with your business goals, our team is here to help. Please get in touch and we’ll guide you through the next steps to make the most of these updates.