Budget 2025: Major Shifts in Apprenticeship Funding

The November 2025 budget included several announcements as the government began to pull a number of levers and pivot how the Apprenticeship Levy is used to support the workforce and develop skills.  

At present, the government adds 10% to levy-paying employer’s account. This will be stopped and was originally only put in place to smooth to transition from the old funding system to the apprenticeship levy.

Levy-paying employers currently have 24 months to spend the apprenticeship levy when it arrives in their account; this will be reduced to 12 months. Additionally, co-investment rates will change. At present, where a levy-paying employer exceeds their levy account value in a given month, they are required to pay a 5% contribution for that month. This will now become 25% for that given month. These changes mean that having a planned and effective strategy for the use of the Levy in staff development and recruitment is essential. Working with a high-quality training provider who can help you deliver your training objectives in an efficient and timely manner will be essential. Intec have over 40 years’ experience in advising and supporting employers in the use of funding and the delivery of high-quality training and learning.

For small to medium sized employers, they will no longer be required to pay the 5% co-investment for any apprentice aged under 25. This includes the recruitment of young apprentices and those in their current workforce they’re seeking to develop. In addition to this, they will pay no Employer NI, making a significant annual saving whilst the apprentice is in learning.

These changes will come into effect in August 2026.

For all employers, the minimum wage has also increased for Apprentices to £8 per hour, this still means the recruitment and development of young apprentices is a great way to develop your workforce. It will increase the quality of apprenticeship applications to new roles as young people view apprenticeships as a great alternative to University, and when combined with the 16 to 18 recruitment incentive, this makes an early careers strategy for employers an effective recruitment and development tool.

From January 2026, Level 7 Degree’s Apprenticeship programmes will have a reduced eligibility, and from April 2026, the introduction of short course Apprenticeship Units will see a further change in how employers can use apprenticeships to build the skills within their workforce.

Navigating this changing landscape can be complex, but with Intec’s extensive experience in supporting employers in managing such change, we can help.  We have expertise in upskilling your staff with high-quality training delivered by professionals. We have a Free Apprenticeship Recruitment service that has placed thousands of young people with employers across the UK. Now is the perfect time to start and review how you can get the best out of your apprenticeship and employee recruitment strategy.

Read the full Budget 2025 document here: Budget 2025 document - GOV.UK