Growth And Skills Levy: What The £40M Investment Means For Businesses

People in a business discovering the changes made to the growth and skills levy in 2025.

The way that UK businesses fund training has undergone a significant shake-up this year. In April 2025, the government implemented a £40 million investment to reform the old Apprenticeship Levy, relaunching it as the new Growth and Skills Levy. The move seeks to address long-standing criticisms that the old system was too rigid, often resulting in billions of pounds of vital training funds going unused.

This overhaul signals a major shift towards a more flexible, employer-led skills system. It’s designed to give businesses more control over how they invest in their team, enabling them to build a workforce that is more agile and better prepared for the future, but what do these changes mean in practice?

From ‘Apprenticeship Levy’ To ‘Growth And Skills Levy’

For years, the Apprenticeship Levy required businesses with a payroll over £3 million to set aside 0.5% of their payroll costs for apprenticeship training. While well-intentioned, the system was widely seen as too restrictive. Many businesses struggled to spend their funds on approved apprenticeships alone, leading to vast sums of money being returned to the Treasury.

The new growth and skills levy aims to fix this. It acknowledges that workforce development is not just about formal apprenticeships. It also includes shorter courses, upskilling existing employees, and targeted training in high-demand areas like digital technology. By giving employers more flexibility, the government is allowing businesses to invest in the skills that their businesses truly need to thrive.

The Growth And Skills Levy 2025

So, what is actually changing? The new levy, which came into effect in April 2025, introduces several important updates.

Expanded Training Options

The core structure remains: businesses with payrolls exceeding £3 million will continue to contribute 0.5% into their training fund. However, the most significant change is that these companies will now be able to use up to 50% of their apprenticeship levy allowance on a much broader range of training options.

This goes beyond traditional apprenticeships to include:

Modular and short courses: targeted training to plug specific skill gaps quickly.
Upskilling programmes: developing the capabilities of your current employees to take on new roles or responsibilities.
Digital bootcamps: intensive courses in high-demand tech skills like data analytics and cybersecurity.

This flexibility means your training budget can be allocated far more strategically, responding directly to the immediate needs of your business.

Simplified Funding For SMEs

The reforms also aim to make it easier for Small and Medium-sized Enterprises (SMEs) to access training support. The government has committed to simplifying the process for these businesses to tap into funding for apprenticeships and other training, helping to level the playing field and ensure businesses of all sizes can invest in their people.

What Are The Implications For Your Business?

The changes will have a different but equally positive impact on businesses of all sizes across the UK. For large employers, this new flexibility is a game-changer. The ability to use up to half of your levy funds on non-apprenticeship training means you can finally tackle immediate skill shortages without being constrained by the old rules. It reduces the risk of funds going unspent and allows you to build a more comprehensive and responsive growth and skills strategy. This empowers you to develop a more adaptable workforce, ready to pivot as market demands change.

For SMEs, the promise of simpler access to government training support is a welcome development. By reducing bureaucracy, the new system should make it easier for smaller businesses to hire apprentices and upskill their teams, helping them compete more effectively and fuel their growth.

How Do Employees Benefit From The New Levy?

The growth and skills levy UK is not just good for employers; it’s great news for employees too. The reforms will create a richer landscape of development opportunities for your team.

Employees will gain access to a wider variety of training that is better tailored to their individual career paths and the evolving needs of their roles. The focus on high-demand skills, such as digital literacy, means your team can stay relevant and prepared for the industries of the future. This investment in their growth not only supports their career progression but also boosts job satisfaction and employee retention. When people see a clear path for development within a company, they are more likely to stay committed for the long term.

Taking Advantage Of The Growth & Skills Levy

To make the most of this new opportunity, it’s wise to take action now. By taking a proactive approach, you can turn this levy from a simple tax into a powerful strategic investment in your people.

Conduct a skills audit: begin by identifying the skills your business needs to achieve its future goals. Where are your current gaps? A thorough skills audit will give you a clear roadmap for your training priorities.
Engage with training providers: start conversations with training providers who can offer a mix of apprenticeships, short courses, and other programmes. Explore your options to see what best fits your needs.
Plan your budget: think about how you will allocate your levy funds. What is your plan to balance the budget between funding apprenticeships for new hires and investing in training for established employees? A clear plan will help you maximise your return on investment.

What Next?

At Penguin Learning, we specialise in helping businesses by creating training programmes that deliver real results. If you’re ready to build a plan that leverages the new Growth and Skills Levy to its full potential, please contact us to find out how we can support your business.

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Image Source: Canva

Topics: Apprenticeship Levy Growth And Skills Levy

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