UK Growth and Skills Levy Changes, August 1, 2026: What US Employers with Staff in England Need to Know

Since August 1, 2026, employers paying the UK Apprenticeship Levy in England see three changes: funds entering their apprenticeship account now expire after 12 months (down from 24), the 10% government top-up on monthly contributions has ended, and once funds run out they pay 25% of training costs for apprentices aged 25 or older (up from 5%). Government funding has also been withdrawn from 16 apprenticeship standards for new starts from September 2026.

If your US company has a UK subsidiary with a pay bill above £3 million, the levy is already a line on its monthly payroll: HMRC charges 0.5% of the annual pay bill, less a £15,000 allowance. The Growth and Skills Levy reforms change how much of that cost you can recover as training. This article walks through each change using the Growth and Skills Levy reforms factsheet and the Apprenticeship funding rules for August 2026 to July 2027 (version 3). It covers England only.

Why this matters to a US-managed budget

Think of the levy account as a use-it-or-lose-it training fund that your UK payroll pays into each month. Each month’s funds equal the levy declared multiplied by the share of pay going to employees who live in England, and they arrive shortly after the 22nd. Before the reforms, that fund was boosted by 10% and kept for 24 months. Now there is no boost, and new money lapses after 12 months. Funds that expire unspent can no longer pay for training.

Change 1: funds expire after 12 months

• Scope: new funds entering accounts from August 2026. Funds already in accounts before then keep the 24-month expiry.
• Example from the official guide: funds entering in September 2026 become unavailable in September 2027 unless spent.
• Order of use: first in, first out; payments always use the oldest funds first.
• Spent means paid out: funds are spent when they leave the account as a payment to the training provider.

Change 2: the 10% top-up is gone

The reforms factsheet states that the 10% government top-up on monthly levy contributions stops. The funding rules record that it will no longer be added to new funds entering levy accounts from August 1, 2026, and the levy transfer guidance was updated the same day to remove it.

The practical effect is that the levy you pay and the funds you can spend are now closer to each other: what enters the account each month is the levy declared, adjusted for the share of pay going to staff living in England, with nothing added on top.

Change 3: 25% co-investment once funds run out

When a levy payer’s funds are exhausted, the employer contribution for apprentices aged 25 and over rises from 5% to 25%, with the government paying 75%, for new starts from August 1, 2026 (funding rules, paragraph 213.1). The guardrails:

• apprentices already in training keep the previous 95% government rate;
• apprentices aged 16 to 24 remain fully funded up to the funding band maximum;
• foundation apprenticeships are exempt from the 25% rate;
• apprenticeship units (30 to 140-hour courses for staff aged 19+) follow the same 75/25 split for learners aged 25+ when levy funds are insufficient;
• employers that do not pay the levy still pay 5% for apprentices aged 25+.

On the £10,000 funding band used in the funding rules’ examples, that is 25% × £10,000 = £2,500 per apprentice aged 25+ starting after your account is empty, compared with £500 at 5%.

Change 4: 16 standards lose funding

The offer has grown to more than 700 standards, some used mainly for professional development of employees aged 25+. From September 2026, funding is withdrawn for all new starts, regardless of age, on these 16 standards:

Apprentices already on these programs are funded to completion. Employers can still pay for them privately, and the under-25 National Insurance exemption still applies. Note also that under the 2026 to 2027 rules, Level 7 standards are funded only for apprentices aged 16 to 21, or 22 to 24 with an EHC plan or care experience.

What did not change

Several rules that US teams often ask about are untouched by the August 2026 reforms, according to HMRC’s levy guidance and the transfer guidance in the base:

• The levy rate and threshold: 0.5% of the annual pay bill, payable by employers whose pay bill (with connected companies or charities) exceeds £3 million.
• The £15,000 allowance, which cannot be carried over into the next tax year and is shared between connected companies.
• Monthly reporting through the Employer Payment Summary, and records kept for at least 3 years after the tax year they relate to.
• Corporation Tax treatment: HMRC states levy payments are a deductible expense for Corporation Tax.
• The transfer allowance: up to 50% of the previous year’s levy funds, with the English percentage applied; it now covers both apprenticeships and apprenticeship units.
• Industry levies: you still pay the Apprenticeship Levy even if you contribute to an industry training levy such as the Construction Industry Training Board Levy.

In other words, the cost side of the levy is stable; what changed is how long the resulting funds last and how much you pay once they are gone. For a US finance team, that turns the levy account from a slow-moving reserve into something to plan quarter by quarter.

Action plan for the next budget cycle

1. Map your balance by month of entry in the apprenticeship service, and flag funds due to expire within the next quarter.
2. Re-forecast senior development programs. If they relied on Operations Manager, Team Leader or Chartered Manager standards, funding ends for new starts from September 2026.
3. Shift the mix toward under-25s. Training is fully funded for them, and there are no employer National Insurance contributions on eligible earnings for apprentices under 25.
4. Look at foundation apprenticeships for entry-level hires aged 16 to 21: fully funded, exempt from 25% co-investment, with a £2,000 incentive.
5. Pledge surplus funds. You can transfer up to 50% of last year’s levy funds to other businesses; transfer payments are taken before your own apprentices’ payments each month.
6. Brief headquarters. Budget 25% co-investment for any 25+ start that may fall after your account runs dry.

To check how a rule applies to your UK entity, ask the Apprenticeships in England knowledge base, for instance “I heard the government used to top up our monthly levy payments by 10%: is that still happening?” Answers are drawn only from the indexed government documents. If you are curious about the approach behind such cited answers, see RAG as a service.

Official sources: Growth and Skills Levy reforms factsheet, Pay Apprenticeship Levy (HMRC) and the Apprenticeship unit technical funding guide. The funding rules note they may change at any time.