For forward-thinking businesses, the new Growth & Skills Levy isn't just an administrative update, but a prime opportunity to close the technical skills gap. With AI adoption and data literacy sitting at the very top of the national economic agenda, the Growth & Skills Levy is designed to be the primary vehicle for funding your workforce transformation.
Here is everything you need to know about what the new levy is, how the 2026 rules impact your budget to build an AI-forward workforce.
What is the Growth & Skills Levy?
The Growth & Skills Levy is the UK government’s revamped workplace training fund in England, replacing the legacy Apprenticeship Levy. While full-length apprenticeships remain a vital cornerstone of the system, the new levy's main changes are the ability to fund short, modular training courses known as "Apprenticeship Units” and support the skills of young people under 25.
The funding mechanism itself remains identical to the previous system. UK employers with an annual payroll over £3 million continue to contribute 0.5% of their total pay bill into a ring-fenced digital account.
About AI Apprenticeship Units
AI Apprenticeship Units are designed with the aim to help people gain targeted skills quickly, without committing to a traditional apprenticeship programme. Government AI units are built around 30 hours of live delivery, 90 hours in total - nearly three working weeks of getting senior leaders in a room or on a Zoom call. Unsuitable for many organisations.
Corndel takes a different approach. Our apprenticeship units are shaped by employer research, academic insight and our market-leading track record in practical leadership development. Blending live delivery, self-directed learning and peer reflection. Programmes designed around what leaders actually need, to make better decisions and ensure AI adoption.
The 2026 Levy Timeline: Key Changes You Must Plan For
The transition brings several structural updates that introduce a sharp "use-it-or-lose-it" pressure on large enterprises.
- 12-Month Fund Expiry: Previously, employers had 24 months to spend their accrued levy funds. That window has been cut to 12 months. Unspent funds return directly to the Treasury much faster, meaning proactive, continuous training planning is now non-negotiable.
- Removal of the 10% Government Top-Up: The historical 10% monthly bonus added by the government to your digital account has ended. Your training pot is exactly what you pay in.
- The 25% Co-Investment Rate: If your organisation exhausts its core levy pot, the cost share for additional training has risen. The government's co-investment coverage drops from 95% to 75%, meaning employers must cover 25% of the costs for extra training out-of-pocket.
- Management Funding Cuts: Funding for 16 traditional higher-level management standards (including the Level 3 Team Leader and Level 5 Operations Manager pathways) is being withdrawn for new starts.
- The support of under 25s: Under the new legislation, apprenticeship training costs are fully funded for individuals under 25, with SMEs paying nothing for training.
The Opportunity for Corndel Partners
For organisations leading change, AI and Data apprenticeship programmes remain one of the most effective ways to create lasting capability. As funding shifts away from generic management standards, Corndel partners have a unique opportunity to build the essential capability and confidence their leaders need to turn AI potential into real, organisation-wide impact with our AI Strategy and Opportunity apprenticeship unit.
How the Growth and Skills Levy Benefits Under 25s
When it comes to nurturing professionals under 25, the shift from the old Apprenticeship Levy to the Growth and Skills Levy rewrites the playbook. The previous framework applied blanket rules across age groups, but the new legislation deliberately skews financial backing toward early-career talent to reverse the decline in young people entering the workplace.
The most significant differences explicitly targeting the under-25 demographic include:
Free Training for SMEs: Under the old system, small and medium-sized businesses always had to contribute a 5% co-investment fee to train any individual. The new levy entirely removes this cost burden for teams under 25, granting smaller organisations 100% full government funding to bring in and develop fresh talent.
Level 7 Age Limits: In the past, employers frequently used levy funds to send senior professionals through expensive Level 7 management programmes. The new rules completely restrict Level 7 funding to individuals aged 16 to 21, extending up to 25 only for care leavers or those with an Education, Health and Care Plan (EHCP), effectively preserving executive-level development funding exclusively for young people.
New Entry Pathways: The new framework introduces Foundation Apprenticeships specifically designed to establish accessible entry-level routes into the workplace for young individuals under 22. This provides a structured alternative to rigid, multi-year programmes.
Is the Growth & Skills Levy replacing the Apprenticeship Levy?
Yes. The Apprenticeship Levy has evolved into the Growth & Skills Levy. While traditional apprenticeships are still fully supported and remain core to long-term talent pipelines, the new system introduces modular short courses and a shorter window for employers to use their funds.
How much is the Growth & Skills Levy?
The tax rate remains unchanged. If your organisation's annual wage bill is over £3 million, you contribute 0.5% of your total payroll, offset by a £15,000 annual allowance.
Should I be paying the Growth & Skills Levy if I’m an SME?
If your annual payroll is under £3 million, you do not pay into the levy. However, smaller businesses still heavily benefit. Non-levy-paying SMEs can access government funding that covers 95% of apprenticeship costs.
Furthermore, for apprentices under the age of 25, the government covers 100% of the training costs, making it an incredibly cost-effective time to build a digital-native team. SMEs can also leverage "levy transfers," where large enterprise partners pledge their unspent funds to pay for your training.
How to Maximise Your Levy Spend in 2026: Next Steps
To prevent your funds from expiring and reverting to the Treasury, your business should take action immediately:
- Audit Your Digital Account: Assess your current monthly levy contribution against your projected 12-month expiry window to spot unspent balances before they lapse.
- Map Your Technical Skills Gaps: Identify which departments are falling behind on data literacy or missing out on the efficiency gains of generative AI and automation.
- Build a Blended Learning Pathway: Combine full-length data programmes for your technical core teams with short AI Units to rapidly upskill wider leadership.
Ready to future-proof your workforce?
At Corndel, we pair world-class technical expertise with the human leadership skills required to drive true organisational transformation. Contact our team today to build a tailored training strategy that maximises your Growth & Skills Levy.