Business 17 wasted when it could be put to good use supporting smaller businesses in the industry who are urgently seeking to grow and develop their workforce. Changing this pattern and ensuring this wasted funding is utilised where it is needed could significantly change the trajectory of automotive skills gaps in the coming years. Key changes to the levy The Autumn Budget (November 2025) confirmed three changes taking effect for new funds/starts from 1 August 2026: O Fund expiry – previously, funds expired after 24 months; this is now cut to just 12 months O Government top-up – the government used to add 10% on top of all levy payments; new funds will no longer be topped up O Co-investment (levy exhausted) – previously, employers were required to pay just 5% of training fees where levy funds were shared – they are now required to pay 25% O Non-levy employers – previously, smaller employers paid 5% of training fees for apprentices of any age. Now training for apprentices aged 16-24 is fully funded by the government, providing significant support for smaller businesses and school leavers alike O From October 2026 – non-levy-paying SMEs will be able to claim a £2,000 cash hiring grant per new apprentice aged 16–24 on top of the fully funded training costs, further supporting smaller employers. The changes to co-investment are set to impact larger employers significantly. For example, an employer in the £9,000 funding band with an apprenticeship starting up to 31 July 2026 would pay just £450 towards training costs, whereas a business with an apprenticeship starting from August onwards will pay £2,250 – a five-fold increase. How to maximise post-reform levy funding The IMI has a simple checklist for employers looking to hire an apprentice. It’s also worth keeping a note of this practical guidance on how to make the most of the available levy funding: O Never forget the 12-month expiry date – funding should be carefully allocated and spent within 12 months, or it will be lost without warning O Transfer unused funds to support smaller partners – don’t let the money go to waste when it could make a real difference to a small business and bring new talent into the sector O Make the most of fully funded training – non-levy-paying employers don’t need to pay a penny of the training and assessment costs for apprentices from now on, just the apprentices’ wages O Apply for the hiring grant – launching this October, the £2,000 hiring grant could help smaller businesses tap into the multitude of benefits of apprenticeships more easily tinyurl.com/IMIlevy Levy-paying businesses can transfer up to 50% to another business if it will not be spent before expiring
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