Apprenticeship Levy Refocus: Level 7 Courses Limited to Young Apprentices
The government has announced that, starting January 2026, employers will only be able to use the apprenticeship levy to fund Level 7 courses (equivalent to a Master’s degree) for existing apprentices and those aged 16 to 21. These courses accounted for around 10% of the overall apprenticeship budget. The change helps address concerns that employers have been using Level 7 funding to upskill existing staff with expensive qualifications such as MBAs. It is also part of a broader policy to address skills shortages in key sectors and to refocus training on the youngest age groups, including the introduction of new foundation apprenticeships from August 2025. Plans to replace the existing apprenticeship levy with a “Growth and Skills Levy” are already being implemented.
New Immigration Rules
On 12 May 2025, the Government published its White Paper, “Restoring Control Over The Immigration System”. This contains wide-ranging proposals aimed at reducing net migration, linking the immigration system to skills and training requirements, cracking down on illegal migration, and improving integration and community cohesion. Key provisions affecting business immigration include an increase to the Skilled Worker skills threshold from level 3 to level 6; a 32% increase in the Immigration Skills Charge; reducing the Graduate Visa from two years to 18 months; and increasing the residence requirement for settlement from five to ten years. The Immigration Salary List will also be replaced with a new Temporary Shortage List, and the residence requirement for applications for British Citizenship will be increased.
HMRC Updates
HMRC’s Check Employment Status for Tax (CEST) tool helps hirers, agencies and individuals to assess whether a worker should be classed as employed or self-employed for tax purposes, including whether the off-payroll working (IR35) rules apply. HMRC will stand by CEST’s determinations provided the information is accurate and complete. With effect from 30 April 2025, the CEST tool has been updated with a new question to establish whether a contract is in place. A user can only continue to use the CEST tool if the answer is “yes”. This new question reflects the 2024 Supreme Court ruling in Professional Game Match Officials Limited v HMRC that where a contract exists, there is also mutuality of obligation, i.e. an obligation on the employer to provide work and on the employee to accept it. It also addresses criticism that CEST did not previously address the mutuality of obligation test sufficiently. However, the underlying logic of CEST remains the same as before the update. Other changes include improved guidance and more user-friendly language and layout.
New Fraud prevention Offence: Is Your Organisation Ready?
From 1 September 2025, the Economic Crime and Corporate Transparency Act 2023 will introduce a new offence of failure to prevent fraud, which will apply to large organisations and their subsidiaries. Organisations may be held criminally liable where an employee, agent, subsidiary or other associated person commits fraud intending to benefit the organisation. This could include, for example, dishonest sales practices, hiding important information from consumers or investors, and fraudulent practices in financial markets. The onus will be on an organisation to prove, on the balance of probabilities, that it had reasonable procedures to prevent fraud, or that it was unreasonable to expect it to have such procedures in place. This defence is based on six principles: top-level commitment; risk assessment; proportionate risk-based prevention procedures; due diligence; communication and training; and monitoring and review. The Government has published guidance on reasonable fraud prevention procedures to help employers minimise risks by developing an anti-fraud culture. Ahead of the new requirement coming into force, employers are advised to check whether they are in scope and to consider including an anti-fraud clause in employment contracts and consultancy agreements.
Equality Guidance Changes
On 20 May 2025, the Equality and Human Rights Commission (EHRC) published a consultation on its proposed updates to the Code of Practice for Services, Public Functions and Associations to take account of the Supreme Court’s recent judgment in For Women Scotland v Scottish Ministers. Proposed amendments to the Code include an updated definition of “sex” to clarify that it means only biological sex as recorded at birth; new guidance on Gender Recognition Certificates; and updated sections on competitive sport, single-sex and separate-sex services. The consultation closes on 30 June 2025. Once the EHRC has finalised the Code of Practice, it will be submitted to the Minister for Women and Equalities for approval before being passed by Parliament. The EHRC is also considering whether its other statutory and non-statutory guidance needs updating to reflect the Supreme Court’s ruling.
Low Pay Commission Consultation: National Minimum Wage Rates
The Low Pay Commission has published a consultation on National Minimum Wage (NMW) rates. This will inform the Commission’s recommendations to Government later this year on the NMW and National Living Wage (NLW) rates to apply from April 2026. The consultation is seeking evidence on the impact of the April 2025 increases on workers, employers, the labour market and the economy, as well as on the affordability and effects of a 2026 increase to an NLW rate in the range of £12.50 to £12.80. Submissions are also requested on the specific effects of recent increases to the 16-17 year old and apprentice rates, including the effects on the employment prospects of these younger age groups. An annex to the consultation sets out possible approaches to lowering the NLW threshold in line with the Government’s aim of extending it to all workers aged 18 and over. Responses to the consultation must be submitted by 30 June 2025.
