The New Skills & Growth Levy: Act Fast, Invest Smart, Secure Your Talent Pipeline
Adapting to the New Skills and Growth Levy:
What Employers Need to Know
Recent changes to the Apprenticeship Skills and Growth Levy mark a significant shift in how employers plan and fund workforce development. One of the most impactful updates is the reduction in the period during which levy funds can be used. Levy funding will now expire after 12 months, down from 24 months. This shorter window means employers must act more quickly and strategically to avoid losing unused funds.
Alongside this, co-investment arrangements have changed. For employers who do not have sufficient levy funds or whose levy funds have run out, the employer contribution toward apprenticeship training has increased. This places greater importance on careful programme selection and clear alignment between training and business priorities, ensuring every pound invested delivers value.
While these changes may feel challenging, they also encourage a sharper focus on skills that genuinely drive growth. This is where Umbrella Training can help. We work closely with employers to design tailored apprenticeship programmes that meet specific operational and leadership needs, making the most of available funding within tighter timescales.
Our specialist pathways include Luxury Leaders, developed for high-end hospitality and service environments, and Chef Apprenticeships that build both technical excellence and long-term career progression in the kitchen. By tailoring programmes to your business, we help ensure apprentices develop the right skills, at the right time, with maximum return on investment.
With thoughtful planning and the right training partner, the new Skills and Growth Levy can still be a powerful tool for developing talent and supporting sustainable growth.
Here's what you need to know, with the latest statistics and recommendations for strategic adaptation:
1. Levy Funding Window Halved
Key Change: Levy contributions now expire after 12 months, down from 24 months.
Impact: With over £5 billion currently unspent in levy accounts, employers risk losing funds twice as fast if they don’t act swiftly.
2. Removal of 10% Top-Up
The government’s 10% top-up on levy contributions has been eliminated. Employers now receive only what they contribute, increasing pressure to plan funding precisely.
3. Higher Employer Co-Investment
Previously, when levy funds ran out, the government covered 95%, with employers contributing just 5%.
Under new rules, the co-investment rate rises sharply to 25%, significantly increasing financial responsibility for employers once their levy pot is depleted.
4. Fully Funded Training for Under‑25s in SMEs
From August 2026, SMEs training apprentices aged under 25 will need to contribute 0% toward training; previously, they covered 5%. This opens doors for businesses to nurture younger talent.
5. Employers’ Use of Levy: A Reality Check
The Institute of Student Employers found that employers used only 42% of their levy funds in 2024, mirroring the previous year’s 41%.
That leaves a significant proportion unused, now at risk of expiration.
6. Proven ROI of Apprenticeships
86% of UK employers say apprenticeships help develop skills directly relevant to their organisation, while 78% report improved productivity.
Typical annual net gain per apprentice ranges from £2.5k to £18k - a substantial return on investment.
92% of companies with apprentices report a more motivated, satisfied workforce; 80% see significantly higher retention.
What Employers Can Do
Prioritise Urgent Spend
Map out your levy balance monthly. Delay or risk losing a significant portion of your budget.
Bundle programme start dates to align with levy inflows, reducing expiration risk.
Align Training with Business Strategy
Ensure every training pound is tied to a strategic business outcome - whether leadership, technical capability, or innovation.
Customised Programmes - Maximise Value
Umbrella Training specialises in:
Luxury Leaders: Tailored for hospitality and high-end service, embedding industry-specific leadership and customer-care skills.
Chef Apprenticeships: Cultivates technical kitchen skills and career progression from day one.
By aligning programmes with your operational needs and timelines, we ensure that every training investment delivers tangible return, whether through improved service quality, lower staff turnover, or enhanced productivity.
Leverage Co-Investment Planning
If your levy runs out, anticipate the 25% cost share.
Reduce exposure by selecting training units carefully and pacing registration around available funds.
Final Take
Though the reforms introduce stricter deadlines and higher costs, they also advocate sharper, more outcome-focused investment in skills. Processing training through concise, targeted programmes, such as those Umbrella Training offers, can transform the Growth and Skills Levy into a strategic driver of sustainable growth.
Don’t let your levy funds expire; start planning today.
Connect with us to design tailored apprenticeship programmes that deliver measurable ROI and align with your business goals.