Budget 2025: the levy changes every levy paying employer needs to plan for

The Autumn Budget on 26 November 2025, and the follow up announcement on 7 December, changed the arithmetic of the apprenticeship levy. If your organisation pays it, three things are different and one of them has a deadline built into it.

What changed for levy payers

The 10 per cent top up has gone. Levy accounts previously received a government top up on contributions. That has been removed.

Funds now expire after 12 months, not 24. This is the one with a deadline. If you have been sitting on an unspent balance, the window to use it has halved.

Co investment has changed once your funds run out. Government co investment drops to 75 per cent, so the employer contribution rises from 5 per cent to 25 per cent.

What changed for smaller employers

The other side of the ledger is more generous. Apprenticeship training is fully funded for apprentices aged under 25 at small and medium sized employers, an investment worth £725 million over the Parliament.

The stated aim is 50,000 more young people on apprenticeships over three years. The reason is not hard to find: apprenticeship starts among young people have fallen by almost 40 per cent since 2015 to 2016.

The practical move, this quarter

Pull your levy balance and look at it against the 12 month expiry rather than the old 24. Money that felt comfortably in hand under the old rules may now be at risk, and a long programme committed late in the window will not rescue funds that expire before it starts.

Then look at your under 25s. Where you are an SME, training them now costs you nothing in fees. Where you are a levy payer with a healthy balance, the same people are the cheapest and most durable way to spend it before it expires.

We do this exercise with employers regularly and it usually takes under an hour. If it would be useful, get in touch and we will go through your position with you.

Sources

Apprenticeship service, Budget 2025 growth and skills levy
GOV.UK, 50,000 more young people to benefit from apprenticeships