It’s now been a week since the Government released its latest Budget, which included several major updates to apprenticeship funding and employer contributions. Although many of the changes are planned for 2026 (with dates still to be confirmed), employers across all sectors are already reviewing what this could mean for recruitment, training budgets, and workforce development.
At SRSCC, we want to make sure employers have clear, accurate information- so here’s a breakdown of the key announcements and what they could mean for your organisation.
Co-Investment Removed for Under-25s: A Major Win for SMEs
One of the most significant developments announced last week is that apprenticeship training for under-25s will become fully funded for SMEs, with no 5% co-investment required.
Currently, SMEs contribute 5% towards training costs (reduced to 0% for under-22s in 2024). This relief is now being extended to include apprentices aged 22–24, meaning SME employers will no longer pay any training contribution for apprentices under 25.
What we know one week on:
- Applies to apprentices under 25
- Extends the existing under-22 support
- Implementation still pending confirmation (expected in 2026)
- Backed by £725 million of new apprenticeship funding
What this means for SMEs:
Hiring a young apprentice could soon come with no training costs at all, significantly reducing barriers for early-career recruitment.
£820 Million “Youth Guarantee”: Expanding the Talent Pipeline
The Budget also confirmed an £820 million Youth Guarantee, designed to ensure all 18–21-year-olds have access to:
- A place in college
- An apprenticeship
- Tailored job support
After 18 months, the programme will guarantee paid work over benefits.
What this means for employers:
A stronger, more consistent flow of motivated young talent is expected, with more young people supported to progress into training and work.
Changes Ahead for Levy-Paying Employers
From April 2026, the apprenticeship levy will evolve into a Growth and Skills Levy, bringing several important reforms for larger organisations:
- Removal of the Government’s 10% levy top-up
- Levy funds will expire after 12 months instead of 24
- Employer co-investment will increase to 25% once levy funds are used
What this means for levy payers:
Larger employers will need to plan and utilise levy funds more quickly, and may face increased training contributions if demand for apprenticeships is high.
Rising Minimum Wage Rates for Apprentices
Minimum wage rates will rise from April:
- Apprentices under 19 / first year: £8.00 per hour
- 18–20-year-olds: £10.85 per hour
- 21+: £12.71 National Living Wage
What this means for levy payers:
These changes should be built into upcoming recruitment and budget planning for new apprentices.
Levy Income Predicted to Grow — Funding Pressures Remain
The apprenticeship levy is forecast to generate:
- £4.4bn in 2025–26
- £4.6bn in 2026–27
- £5bn by 2029–30
Despite rising levy income, the apprenticeship budget remains stretched, with overspend reported last year. Many sector leaders are encouraging further reinvestment into training delivery.
What Should Employers Do Now?
A week on from the Budget, one thing is clear: these reforms create significant opportunities—especially for SMEs—while also highlighting the need for careful planning among levy-paying employers.
Key considerations moving forward include:
- Funding timelines and budget adjustments
- Longer-term workforce and talent strategies
- Levy vs. non-levy approach
- Maximising support for young apprentices
Need Further Support?
If you’d like guidance on apprenticeship funding, upcoming reforms, or workforce planning, get in touch with our team. We’re here to help you make the most of the opportunities the budget presents.
