How will the 25% co-investment affect us?

From 1 August 2026, the 10% government top-up on new levy funds ends. Once your levy runs out, you'll pay 25% of training costs (up from 5%). Plan your levy spend strategically to manage this increase.

Launched April 2026, What You Need to Know

Growth & Skills Levy 2026: What Every Employer Needs to Know

Q: When does the Growth & Skills Levy come into effect?

The Growth & Skills Levy launches on 1 April 2026. The key changes include reduced levy expiry (from 24 months to 12 months) and new apprenticeship units becoming available for the first time.

Q: What happens to apprentices already enrolled in defunded standards?

Existing learners in defunded standards (Team Leader L3, Ops Manager L5, Coaching Professional L5, Chartered Manager L6) will be levy-funded to completion. Only new starts from 1 September 2026 onwards will lose funding.

Q: Is Team Leader L3 being replaced?

Team Leader L3 is being defunded (no new starts from September 2026), but it is not being formally replaced by government. TESS Group offers AI for People Leaders L4 as a transition pathway, it covers the same audience but with AI skills embedded.

Q: What are Apprenticeship Units?

Apprenticeship Units are new modular courses available from April 2026. They range from 30-140 hours and cover AI, leadership, digital, and engineering topics. Employers can use up to 50% of their annual levy to fund these units, making them ideal for upskilling without a full apprenticeship commitment.

Q: How do I check my apprenticeship levy balance?

Use our Apprenticeship Levy Calculator at tessgroup.co.uk/levy-calculator.html to model your current balance, expiry dates, and projections under the new 12-month rule. You can also log into your Digital Apprenticeship Service (DAS) account to check your exact balance.

Q: Can existing employees do AI apprenticeships?

Yes. Most AI apprenticeships, including TESS Group's Level 3-6 programmes, are open to existing employees. Apprenticeships are not just for new hires, many employers use them as upskilling routes for current staff.

Q: What support is available for SMEs?

From 1 October 2026, SMEs hiring apprentices aged 16-24 get £2,000 incentives (£3,000 if aged 16-18). Non-levy under-25 apprenticeships are 100% government-funded. There's also no employer NI for under-25s earning below £50,270.

Your guide to the changes. Key deadlines. The defunding risk. How to maximise your levy before 12-month expiry. And the AI apprenticeships that replace the old standards.

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KEY DATES

Your 2026 Levy Timeline

1 April 2026

Growth & Skills Levy launches. Levy expiry reduced from 24 months to 12 months. Apprenticeship Units (modular AI, leadership, digital, engineering courses) become available for the first time. Employers can use up to 50% of annual levy for units.

1 August 2026

Government top-up ends. The 10% government top-up on new levy funds disappears. Co-investment rises from 5% to 25% once your levy runs out. Your pot is now what you pay in.

1 September 2026

16 standards defunded. New starts in Team Leader L3, Ops Manager L5, Coaching Professional L5, Chartered Manager L6, and 12 others lose funding. Existing learners continue to completion (protected). Act now if you have new cohorts planned.

1 October 2026

SME incentives launch. £2,000 for hiring apprentices aged 16–24 (£3,000 if aged 16–18). Non-levy under-25 apprenticeships 100% government-funded. No employer NI for under-25s earning below £50,270.

THE CHANGES

Apprenticeship Levy: Before vs After

	Before (24-Month Levy)	From 1 April 2026 (12-Month Levy)
Levy Expiry	24 months	12 months, use it faster or lose it
Government Top-Up	10% bonus on new funds	0%, ends 1 August 2026
Co-Investment Rate	5% (after levy exhausted)	25% (after levy exhausted, from Aug 2026)
Modular Courses (Units)	Not available	Available, up to 50% of annual levy can fund units
Leadership Standards	Team Leader L3, Ops Manager L5, Senior Leader L7 funded	Defunded from 1 Sept 2026, existing learners protected
SME Support	Standard rates apply	£2,000–£3,000 hiring grants from 1 Oct 2026

YOUR SITUATION

What This Means by Employer Size

Large Levy Payer

£3M+ Payroll

Paying £60K+ annual levy.

12-month expiry is urgent, plan quarterly spend
Use-it-or-lose-it pressure increases
25% co-investment from Aug impacts budget
High volume = switch 50+ learners from defunded to AI programmes
Explore Apprenticeship Units as supplementary upskilling

Mid-Size Payer

Running Low on Levy

Levy running out before August 2026.

Front-load programmes before 25% co-investment kicks in
Maximise remaining balance through April–July
Plan for £1-in-£4 cost share from August onwards
Prioritise defunded standards enrolment before Sept 1
Budget for higher training costs Q3–Q4 2026

SME (Non-Levy)

Sub-£3M Payroll

Don't pay levy. New opportunities from Oct 2026.

100% government funding for under-25 apprentices (no co-investment)
£2,000–£3,000 hiring grants from 1 October
No employer NI on under-25s earning <£50,270
Use Apprenticeship Units risk-free from April
Ideal time to start AI apprenticeships

⚠️

Alert: 16 Standards Being Defunded 1 September 2026

This affects new starts only. Apprentices already enrolled will be funded to completion, regardless of start date. But from September, 16 apprenticeship standards, including three leadership standards, will lose government funding.

Key standards affected: Team Leader / Supervisor (L3), Operations / Departmental Manager (L5), Coaching Professional (L5), Chartered Manager (L6), and 12 others across management, hospitality, and other sectors.

12,670

Team Leader L3 starts/year (at risk)

12,530

Ops Manager L5 starts/year (at risk)

1 Sept 2026

Defunding deadline (enrol before)

The transition: TESS Group's AI for People Leaders L4 and AI for Operations Leaders L4 are levy-funded and serve the same audiences. Book a discovery call to discuss the transition path.

NEW OPPORTUNITY

Apprenticeship Units: Modular Training Now Available

From April 2026, employers can fund short modular courses (30–140 hours) directly from their levy. These Apprenticeship Units are ideal for rapid upskilling, complementary to full apprenticeships, and available in AI, leadership, digital, and engineering.

🤖 AI Units

30–60 hours, Levy-fundable

Generative AI mastery, prompt engineering, AI for leadership workflows, data literacy, and intelligent automation. Perfect for upskilling leaders and ops teams.

💼 Leadership Units

40–80 hours, Levy-fundable

Change management, digital transformation, remote leadership, and strategic thinking. Short, focused programmes to build leadership capability.

🔧 Digital Units

50–100 hours, Levy-fundable

Cloud fundamentals, digital process design, cybersecurity essentials, and data analytics. Build digital fluency across your workforce.

⚙️ Engineering Units

60–140 hours, Levy-fundable

Industrial automation, advanced manufacturing, technical design, and system optimization. Supporting the UK's engineering skills priority.

Key rule: You can use up to 50% of your annual levy for Apprenticeship Units. The other 50% must go to full apprenticeships (or longer courses). This encourages employers to blend short and long programmes.

YOUR ACTION PLAN

Five Steps to Take Now

Audit Your Levy

Check your balance on the Digital Apprenticeship Service (DAS). Model expiry under the new 12-month rule.

Enrol Before Sept 1

If planning Team Leader L3, Ops Manager L5, or Senior Leader L7, enrol learners now. Existing learners continue to completion.

Switch to AI Programmes

Consider AI for People Leaders L4 and AI for Operations Leaders L4 as permanent replacements for defunded standards.

Plan for 25% Co-Investment

Budget increases once levy exhausted (from August 2026). Adjust 2026–2027 training budgets accordingly.

Explore Units

Test Apprenticeship Units for rapid upskilling. Use up to 50% of levy for units, blending with full apprenticeships.

HOW WE HELP

TESS Group's Support

We help employers navigate the levy changes and transition to funded, future-ready apprenticeships.

📊

Levy Health Check

Understand your balance, expiry dates, and co-investment impact. We review your situation and project 12-month spend.

Book a Consultation →

🎯

Programme Matching

If you're losing Team Leader L3 or Ops Manager L5 starts, we match you to funded AI alternatives (same audience, more value).

Get Matched →

🔄

Transition Planning

Step-by-step plan to move learners from defunded to funded programmes. Timing, budget, enrolment windows all covered.

Plan Your Transition →

📞

Ongoing Support

Regular check-ins. Levy tracking. Quarterly planning. We help you maximise your budget and hit your skills goals.

Get in Touch →

TESS facts: 4.9/5 on Trustpilot, 689 reviews. Ofsted Good. 18 years in apprenticeships. Nationwide delivery via Zoom/Teams. AI apprenticeships on ST1512 (government priority). All five AI programmes L3–L6 levy-funded.

How do you want to start?

Every organisation is different. Some want to pilot with one or two leaders first. Others want to enrol your entire team from day one. Both work, and we'll help you decide which is right.

Start with one or two leaders

Test, learn, then scale

Put your most forward-thinking leaders through an apprenticeship first. They come back with practical skills, real workplace wins, and the confidence to champion development across the business.

Low commitment way to test the approach

Your pilot becomes your internal advocate

Scale to a full cohort when you're ready

Same levy-funded model, zero cost to start

Discuss a Pilot →

Enrol your entire team

Transform your workforce from day one

When your whole team goes through together, they build a shared language, standardise their workflows, and hold each other accountable. The impact is transformational, not incremental.

Shared vocabulary across your team

Standardised workflows, not individual approaches

Peer learning from different departments

Tailored to your organisation's specific challenges

Enrol your team →

FREQUENTLY ASKED QUESTIONS

Your Levy Questions Answered

When does the Growth & Skills Levy come into effect?

The Growth & Skills Levy launches on 1 April 2026. The key changes include: levy expiry reduced from 24 to 12 months, apprenticeship units available for the first time (modular 30–140 hour courses), and the government top-up ending on 1 August. Co-investment rises to 25% from that date.

What happens to apprentices already enrolled in defunded standards?

Existing learners in defunded standards (Team Leader L3, Ops Manager L5, Coaching Professional L5, Chartered Manager L6, etc.) will be levy-funded to completion, regardless of when they enrolled. The defunding only affects new starts from 1 September 2026 onwards. If you have apprentices on these programmes, they're protected.

Is Team Leader L3 being replaced?

Team Leader L3 is being defunded but is not being formally replaced by government. However, TESS Group offers AI for People Leaders L4 as the strongest transition pathway. It's built on the same ST1512 standard (Digital, Data & Technology Manager), serves the same audience (team leaders, shift managers, section leads), and adds AI skills. It's a natural successor with more value.

What are Apprenticeship Units?

Apprenticeship Units are new modular courses available from April 2026. They range from 30 to 140 hours and cover AI, leadership, digital, and engineering topics. Unlike full apprenticeships (15–24 months), units are short, focused, and can be delivered rapidly. Employers can use up to 50% of their annual levy to fund units, making them ideal for quick upskilling without a full apprenticeship commitment.

How will the 25% co-investment affect our training budget?

From 1 August 2026, the 10% government top-up ends and co-investment rises from 5% to 25%. This means once your levy is exhausted, you'll pay 25% of training costs. Plan accordingly: if you typically spend £100K on apprenticeships, and your levy covers £50K, you'll now pay £25K instead of £5K for the remaining £50K. Front-load high-priority programmes before August.

How do I check my apprenticeship levy balance?

Log into your Digital Apprenticeship Service (DAS) account to see your exact balance. You can also use our Apprenticeship Levy Calculator at tessgroup.co.uk/levy-calculator.html to model your spend, project expiry dates under the new 12-month rule, and plan your strategy. Book a free levy health check with TESS Group for a detailed review.

Can existing employees do AI apprenticeships?

Yes. Most AI apprenticeships, including TESS Group's Level 3–6 programmes, are open to existing employees. Apprenticeships are not just for new hires, many employers use them as upskilling routes for current staff who want to transition to AI-focused roles or develop leadership with AI skills.

What support is available for SMEs (non-levy payers)?

From 1 October 2026, SMEs hiring apprentices aged 16–24 get £2,000 incentives (£3,000 if aged 16–18). Non-levy under-25 apprenticeships are 100% government-funded, no co-investment required. Additionally, there's no employer National Insurance for under-25s earning below £50,270. This makes October 2026 an ideal time for SMEs to start AI apprenticeships with zero cost.

Don't Let Your Levy Expire

The 12-month deadline is real. The defunding is firm. The 25% co-investment will impact your budget. But you have time to plan, and TESS Group is here to help you make the most of your levy and transition to future-ready apprenticeships.