Apprenticeship Reforms Explained: Key Changes for 2026
A major wave of government reforms is set to reshape the apprenticeship landscape in 2026, offering new financial advantages for small and medium-sized employers while pushing larger organisations to rethink how they manage and spend their levy funds. The changes aim to bolster youth employment, reduce hiring costs, and help employers maximise the value of their apprenticeship strategies.
Reed Business School can support employers through these pivotal shifts - helping organisations secure funding, address critical skills gaps, and build stronger long-term talent pipelines.
100% Government funding for Apprentices under 25
What’s changing?
From August 2026, SMEs that do not pay the Apprenticeship Levy will be eligible for 100% government funding for apprentices aged under 25.
Who’s affected?
SMEs
Apprentices under 25
What does this mean for SMEs?
This enhanced funding presents a major opportunity for small and growing organisations to accelerate recruitment, reduce training costs, and invest in early career talent.
Young learners are increasingly recognising the power of work-based learning. Isabelle, a current CIPD Level 3 HR Apprentice, shared:
“We are the future. Start upskilling us now. Apprenticeships are great for employers, and you get loyalty from the apprentice as well. With an apprenticeship, you’re building experience from day one.”
We are the future. Start upskilling us now. Apprenticeships are great for employers, and you get loyalty from the apprentice as well. With an apprenticeship, you’re building experience from day one.
Employers are also seeing the long-term value. Ellacotts Accountancy Firm, a longstanding Reed Business School partner with over 100 apprentices trained together, emphasises the strategic benefit:
“Apprenticeships are a big part of Ellacotts’ recruitment strategy. Everything we do is enabling the success of our clients, our people, or both!” - Giles Nun, Head of People and Innovation, Ellacotts
For SMEs seeking to strengthen their workforce, this reform marks a golden moment to bring fresh talent and loyalty into their organisations.
Levy funds will expire sooner
What’s changing?
From 1 August 2026, the lifespan of new levy funds will halve from 24 months to 12 months.
Who’s affected?
Levy-paying employers
What employers need to do:
Organisations will need sharper, more proactive workforce planning and levy management to ensure funds are utilised before they expire - avoiding the risk of losing significant budget.
Reduced Government co-investment
What’s changing?
When levy funds run out, government co-investment will decrease from 95% to 75%, meaning employer contributions rise from 5% to 25%.
Who’s affected?
Levy-paying employers who exhaust their funds
Effective from: August 2026
Impact: This will increase training costs for many employers, requiring more deliberate budgeting and planning to ensure apprenticeship investment remains sustainable.
Removal of the 10% levy top-up
What’s changing?
From 1 August 2026, the government will remove the monthly 10% top-up currently added to levy contributions.
Who’s affected?
Levy-paying employers
What employers need to do:
With a reduced funding pot, organisations will need to prioritise and target their levy spend with more precision to maximise value.
Defunding of 16 Apprenticeship standards
What’s changing?
The government has confirmed 16 apprenticeship standards - particularly in leadership and management - will be defunded from 2026 to reallocate funding toward young learners and priority skills.
Apprenticeships being withdrawn include:
Team Leader (Level 3)
Operations Manager (Level 5)
Chartered Manager (Level 6)
Plus, a range of others including Coaching Professional, Facilities Management Supervisor, and multiple Improvement programmes.
Who’s affected?
Employers using leadership & management apprenticeships for talent development
Apprentices planning to enrol on affected programmes
What employers need to do:
With these programmes being phased out, employers will need to transition to alternative leadership and management development routes. Reed Business School provides a full suite of CMI-accredited Leadership and Management qualifications from Level 3 to Level 7, offering a high‑quality replacement qualification route for the apprenticeships being removed.
How Reed Business School can help employers navigate these changes
Reed Business School is uniquely positioned to support organisations of all sizes through these reforms, providing clarity, strategy, and training.
Our support includes:
Strategic levy planning
Helping you model, forecast, and optimise levy spend.Youth talent pipelines
Building sustainable early career recruitment pathways aligned to your business goals.High-quality apprenticeship delivery
Designing and delivering programmes that develop essential skills and support long-term organisational growth.Leadership and Management CMI qualifications
With Leadership and Management apprenticeships being defunded, we offer organisations a high-quality alternative: CMI-accredited qualifications in Leadership and Management, from Levels 3 to 7.
If you’d like support preparing for these reforms or want to explore apprenticeship options, contact rbs.reed@reedbusinessschool.co.uk, or call us on 020 7932 2760.