If your business has an annual wage bill under £3 million, you don’t pay the Apprenticeship Levy, and under the government’s new Growth and Skills Levy reforms, that puts you in the driver’s seat.
While large corporations navigate tighter spending deadlines, small and medium-sized enterprises (SMEs) are benefiting from major funding shifts designed to make hiring early-career talent and upskilling staff highly cost-effective.
The government is currently offering additional incentives to employers hiring 16–24 year olds, and the offer is even better for those hiring young people who have been on Universal Credit.
1. Zero co-investment for under-25s
The most immediate win for non-levy employers is the total elimination of training costs for younger recruits:
- The rule: the government fully funds (100%) the training and assessment costs for apprentices aged 16 to 24 at non-levy businesses.
- The impact: you pay standard employee wages, but your co-investment contribution for their qualification is £0. This applies to entry-level roles right up to higher-level technical qualifications.
2. Direct recruitment grants
To help offset initial onboarding and administrative costs, cash incentives are available for SMEs taking on young talent:
- £2,000 for non-levy paying employers per apprentice hired aged 16 to 24
- £1,000 young apprentice payment for hiring a 16–18 year old, or a 19–24 year old if they have an EHCP (Education, Health and Care Plan) or care leaver status
- £3,000 for hiring an 18–24 year old apprentice who has been on Universal Credit for more than 6 months
- No employer National Insurance contributions
Unlike training funds (which go directly to your training provider), this cash payment goes straight into your business bank account to cover uniform, tools, mentoring time or equipment.
3. Unlocking unused levy transfers
Large corporations only use a fraction of their levy pots, but policy rules allow them to transfer up to 50% of their unused funds to smaller businesses.
By connecting with a larger employer (for example an NHS Trust, local authority, local corporate or supply-chain partner), you can get 100% of the training costs covered for staff aged 25+, completely bypassing the standard 5% co-investment fee.
SME action plan: how to capitalise this quarter
| Stage | Action | Key objective |
|---|---|---|
| Step 1: Register | Set up your digital account | Create your free account on the government’s Apprenticeship Service platform to claim non-levy funding allocations. Our step-by-step guide can help you set it up. |
| Step 2: Audit | Review junior and early-career hiring | Identify entry-level or junior vacancies in your business where fully funded under-25 hiring applies. Community Matters can help with recruitment: email us at apprenticeships@ |
| Step 3: Transfer | Explore corporate levy matching | Community Matters can help match you with a levy-transfer partner to cover 100% of adult upskilling costs. |