Apprenticeship Levy Changes – information for recruitment businesses

This is a guest blog by REC business partner, Liquid Friday

The recruitment sector has certainly had plenty on its plate this year. With the Employment Rights Act and Joint & Several Liability dominating conversations, it’s easy to see why changes to the Apprenticeship Levy haven’t been getting quite the same level of attention.

Yet the transition of the ‘Apprenticeship Levy’ into the ‘Growth & Skills Levy’ throws up a number of changes that recruitment agencies should have on their radar.

While the core levy remains unchanged at 0.5% of annual pay bills over £3 million, there is a shift in the way funds can be used, and the resulting financial implications for employers.

Earlier this year, employers were given greater flexibility in how they use their levy funds, with the introduction of apprenticeship units. These shorter, targeted training programmes’ sit alongside traditional apprenticeships and are designed to help businesses address skills shortages more quickly by upskilling existing staff in key areas.

More changes are just around the corner. From 1st August, levy-paying employers will have 12 months rather than 24 months to use their levy funds before they expire. In addition, the 10% government top-up will be withdrawn, meaning employers will only be able to access the value of their contributions.

For organisations that exhaust their levy funds, the cost of training will also increase. Employer co-investment rates will rise from 5% to 25%, with the government funding the remaining 75%.

At a glance: Key changes

28th April 2026

Apprenticeship units were introduced under the Growth & Skills Levy.

1st August 2026

• Levy funds expire after 12 months (previously 24).
• Government 10% top-up removed.
• Employer co-investment rises from 5% to 25% once levy funds are exhausted.
• Non-levy employers recruiting apprentices aged 16-24 become eligible for fully funded training costs.

Growth and Skills Levy Transfer

The reforms also continue to support levy transfers, allowing levy-paying employers to transfer up to 50% of their annual levy funds to other organisations to fund apprenticeship training.

With levy funds set to expire more quickly under the new rules, reviewing how unused funds are used could become increasingly important. At Liquid Friday, we've already used levy transfers to support several SMEs in our region, helping them invest in training, develop new talent and build the skills needed to support future growth and expansion.

What should recruitment businesses do?

• Now is a good time for recruitment businesses to review their apprenticeship and training plans, particularly if they pay the levy. Shorter expiry periods mean levy balances will need more active management, while higher co-investment costs could impact future training budgets.
• Agencies should also ensure they can confidently answer questions from employees and contractors about statutory deductions shown on their payslips, including the Apprenticeship Levy / Growth & Skills Levy.

If you have any questions about these changes, or if your contractors would benefit from further guidance on the levy as a statutory deduction, we’re here to help!  Reach out to the Liquid Friday team for practical support for your business and workforce.
 

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