Growth and Skills Levy (formerly the Apprentice Levy)

The Apprentice Levy is changing in 2026. From 1 April 2026 the Apprentice Levy will become the Growth and Skills Levy. This will coincide with changes which will allow employers to use funds more flexibly, including for short courses, apprenticeship units, and modular training, rather than full apprenticeships alone. The government will also tighten funding rules: levy funds will now expire after 12 months instead of 24, requiring employers to manage their training budgets more proactively. Additionally, the 10% government top‑up will be removed, and once levy funds are exhausted, employer co‑investment will rise from 5% to 25%

No changes have been announced in regard to employers that must pay the levy so any employers with an annual payroll bill of more than £3m will continue to pay levy. The £3m threshold applies to employees that are subject to Employer Class 1 Secondary National Insurance contributions. Connected companies and charities must also be taking into account when making the calculation. However, the following are excluded from the £3m calculation:

• Earnings for any employee under the age of 16;
• Earnings for any employee who is not subject to UK NIC legislation; and
• Earnings on which Class 1A NICs are payable, such as benefits in kind.

There are special rules for certain sectors including franchises, off payroll workers, short-lived companies, managed service companies, employment of recruitment agencies, joint ventures and schools.

The Growth and Skills Levy is charged at 0.5% of your annual pay bill, on a monthly basis, and is shown on your P32 report each month. You also receive the Growth and Skills Allowance of £15,000 each tax year to offset against any levy payable. However, if your business is connected to other businesses, then you will need to decide if this allowance is to be distributed across all or some of your connected businesses, or just used against one.

We will send guidance on compliance requirements and a declaration for impacted employers to confirm they are in scope in early April.