2025 Budget: Apprenticeships to Become Free for SMEs, But What Does This Means for Your Business?

For SMEs facing rising costs and ongoing recruitment challenges, this change has the potential to reshape how businesses hire, train and retain talent.

It was announced that Apprenticeship training costs for anyone under 25 will be completely covered by the government for SMEs.
Currently, non-levy-paying employers must contribute 5% of training costs, with the government funding the remaining 95%. Under the new rules, that employer contribution will be removed entirely.

This policy forms part of a wider government commitment to boost productivity, increase long-term investment in skills, and make it easier for smaller firms to grow.

SMEs have tight budgets and feel the impact of rising wages and cost of living. Eliminating Apprenticeship training costs should remove one barrier.

Apprenticeships combine real work with structured training, enabling SMEs to develop employees who understand the business from day one. For sectors that rely heavily on practical skills, this offers a pipeline of talent tailored to each company’s needs. This announcement will make Apprenticeships a more accessible option for smaller businesses.

At this stage, the government has not confirmed an exact implementation date for making under 25 apprenticeship training free for SMEs. In the 2025 Budget, Rachel Reeves set out the policy intention and framed it as part of her broader growth and skills agenda, but the specific rollout timeline is still to be published.

SMEs should watch for official announcements via GOV.UK and the Department for Education (DfE), who will confirm when training providers such as Fareport can begin delivering Apprenticeships with full government funding.

For the purposes of current Apprenticeship funding and most government business support schemes, an SME (Small and Medium-Sized Enterprise) is defined as a business that meets both of the following criteria:

• Fewer than 250 employees
• Have an annual payroll less than £3 million per year

Although the Chancellor made this announcement directing to SMEs, the government has not yet defined exactly which SMEs this will apply to. At this stage, no formal eligibility criteria have been published.

Because of this, it is still unclear which specific employers will qualify once the policy comes into effect. This means we cannot yet say with certainty whether it will cover:

• micro-businesses
• small and medium employers up to 250 employees
• non-levy payers only

Until the formal funding rules are released, the announcement should be understood as a policy direction, not a fully defined implementation plan.

For now, SMEs should be aware that further guidance, including eligibility criteria, will be issued later in 2025. We will keep our employers up to date as we know more.

Fareport have relationships with multiple large employers who have pledged to transfer their levy to SMEs who need funding. This means your programme can be fully funded with no contribution for any age of learner, even today. We manage the transfer and paperwork for you.

For SMEs, this creates a valuable opportunity to build talent, strengthen teams and address skills gaps with far fewer financial constraints.

At Fareport, we specialise in supporting SMEs to navigate Apprenticeship funding, recruitment and workforce development. Our expertise lies in understanding the unique challenges smaller businesses face and helping them get the maximum value from apprenticeships, whatever changes the government introduces.

As the policy evolves and formal guidance is released, we will continue to provide clear updates and practical support.
Because when it comes to Apprenticeships, Fareport are the SME experts, helping your business turn opportunity into long-term growth.