The 2025 Budget has delivered one of the biggest shifts in apprenticeship funding for SMEs in almost a decade — and it's great news for employers and young people alike. With the removal of co-investment costs for apprentices under 25, alongside a new nationwide Youth Guarantee, the government is making apprenticeships more accessible, more affordable and more central to workforce development than ever before.
For training providers and the organisations we support, these changes will directly impact how businesses recruit, upskill and plan for the future. Whether you're looking to bring in a Business Administrator, develop a future Team Leader, grow your payroll or finance teams, or open doors into specialist digital roles like Digital Accessibility, the updated funding landscape makes it easier and more cost-effective to train fresh talent.
In this blog, we break down what the Budget actually changed, what it means for employers and learners, and how SMEs can take full advantage of the new opportunities across business, digital and professional apprenticeships.
What the 2025 Budget Announcement Really Means for Apprenticeships
The 2025 Budget delivered one of the most significant updates to apprenticeship funding in recent years. The headline change? SME co-investment for apprentices under 25 is being removed, meaning small and medium-sized employers will no longer pay the usual 5% contribution toward apprenticeship training. Instead, the government will fully fund training for eligible apprentices aged 16–24—a major shift designed to boost youth employment and close skills gaps across multiple sectors.
This builds on earlier reforms that removed co-investment for younger apprentices and now extends support to all under-25 learners in SMEs, subject to final implementation details across the coming financial years.
Alongside this, the government also confirmed:
- A redesigned apprenticeship levy system from 2026
- An £820m Youth Guarantee ensuring that every 18-21-year-old has access to an apprenticeship, college place, or targeted job support. Together, these changes aim to make it easier for young people to enter skilled roles—and easier for SMEs to invest in talent.
Why This Matters for SMEs Across Business Services and Professional Roles
For SMEs, the impact is clear: bringing on an apprentice under 25 will now be fully funded, up to each programme's funding band. By removing the co-investment fee, smaller employers can recruit and train apprentices without the upfront training cost that previously held many back. You'll still pay wages and release apprentices for training—but the financial barrier to entry has never been lower.
For sectors where recruitment has been challenging—administration, finance, digital roles, and compliance—this shift could encourage employers to finally start building long-term talent pipelines.
Employer National Insurance Savings Still Apply
In addition to the removal of co-investment, employers can also access existing National Insurance (NI) exemptions for apprentices under 25.
If an apprentice is:
- under 25
- on an approved apprenticeship programme
- earning below £50,270 per year (£967 per week, 2024/25 thresholds)
then the employer does not pay Class 1 employer National Insurance contributions on their earnings.
This applies whether the apprentice is a new hire or an existing member of staff completing an apprenticeship to upskill into a new role—making apprenticeship pathways an affordable option for developing internal talent.
How This Supports Apprenticeships in Business, Digital and Professional Roles
Our apprenticeship programmes are designed to support the essential functions that keep organisations running—finance, administration, leadership, payroll, mentoring and digital accessibility.
Under the new funding rules, SME employers recruiting apprentices under 25 for any of these programmes can benefit from:
- 100% government-funded training (no 5% contribution)
- Employer NI savings for eligible apprentices
- Improved workforce planning, thanks to reduced cost barriers
- Stronger recruitment options, with more young people encouraged into apprenticeships through the Youth Guarantee
This creates the ideal environment for organisations looking to build and retain the next generation of administrators, team leaders, payroll officers, finance assistants, and digital specialists.
Your organisation can take advantage of the new funding rules across a wide range of professional apprenticeships, including:
- Level 3 Business Administrator
- Level 3 Team Leader/Supervisor
- Level 3 Payroll Administrator
- Level 3 Learning & Skills Mentor
- Level 2 Accounts/Finance Assistant
- Level 4 Digital Accessibility Specialist
Check out our full range of programmes here:
As an apprenticeship training provider, we're here to help both employers and aspiring apprentices make the most of these changes—offering expert guidance, flexible delivery and programmes designed around real workplace needs.
If you're ready to develop new talent, upskill your team or explore the possibilities of apprenticeships in your organisation, our team is here to support you every step of the way.