Apprenticeship Funding 2026: What Employers Need to Know

Apprenticeship funding has changed in 2026, creating new opportunities for employers to recruit younger talent, develop existing employees and reduce apprenticeship training costs.

Changes introduced from 1 August 2026 include new funding arrangements based on an employer’s levy status and the apprentice’s age, alongside additional payments and incentives for eligible employers.

The government’s 2026 to 2027 apprenticeship funding rules apply to apprenticeships starting between 1 August 2026 and 31 July 2027. [gov.uk]

For employers looking to strengthen their talent pipeline, address skills gaps or develop their existing workforce, understanding the funding available is an important first step.

What changed with apprenticeship funding in 2026?

From 1 August 2026, new apprenticeship funding arrangements came into effect, including changes to employer co-investment.

The changes provide additional support for employers investing in younger talent and can reduce the financial barriers associated with apprenticeship training.

For employers, this makes it a good time to review how apprenticeships could support recruitment, employee development and wider workforce planning.

How does apprenticeship funding work for employers?

The funding available depends partly on whether an organisation pays the Apprenticeship Levy.

Levy-paying employers

Employers with an annual payroll exceeding £3 million pay the Apprenticeship Levy and can use available levy funds towards apprenticeship training and assessment.

Where a levy-paying employer has insufficient funds available within its Apprenticeship Service Account, additional employer contributions may apply depending on the apprentice’s circumstances.

Non-levy employers

For employers with an annual payroll below £3 million, government funding can cover some or all eligible apprenticeship training costs.

For many employers, this creates an opportunity to recruit and develop younger talent without apprenticeship training costs.

What is apprenticeship co-investment?

Apprenticeship co-investment is the contribution an employer makes towards apprenticeship training and assessment costs when applicable funding does not cover the full amount.

Government guidance describes co-investment as a percentage of the agreed training and assessment price, up to the funding band maximum, paid directly by the employer to the training provider.

The exact contribution depends on the applicable apprenticeship funding rules and the apprentice’s circumstances. [gov.uk], [customerhe…ion.gov.uk]

What apprenticeship grants and incentives are available to employers?

Alongside apprenticeship funding, employers may be eligible for additional financial support.

Apprenticeship Hiring Payment

From 1 October 2026, eligible non-levy employers can receive a £2,000 Apprenticeship Hiring Payment when recruiting a new apprentice aged 16–24.

To qualify, the apprentice must:

• be aged 16–24
• start on or after 1 October 2026
• be employed through PAYE
• not have been employed by the organisation for more than 90 days before starting their apprenticeship
• be funded through standard apprenticeship funding arrangements or transferred levy funds.

The payment is split into £1,000 after 90 days and £1,000 after 365 days, subject to the apprentice remaining employed and actively participating in the apprenticeship.

Young Apprentice Incentive

Employers may receive a £1,000 incentive when employing:

• an apprentice aged 16–18
• an apprentice aged 19–24 with an Education, Health and Care (EHC) Plan
• a care leaver aged up to 24.

This incentive is available to employers of all sizes.

Foundation Apprenticeship Incentive

Employers offering Foundation Apprenticeships may receive up to £2,000 for supporting progression into longer-term apprenticeship opportunities.

National Insurance savings

Employers do not pay National Insurance Contributions for apprentices under 25 where earnings remain below the qualifying threshold, providing a potential additional saving alongside apprenticeship funding.

Care leaver support

Eligible care leavers can receive a £3,000 government bursary, paid directly to them over the first year of their apprenticeship. Employers may also be eligible for an additional £1,000 payment where the apprentice consents to share their care leaver status.

What does apprenticeship funding mean for employers?

The combination of apprenticeship funding and additional incentives can make apprenticeships a more cost-effective way to attract, develop and retain talent.

Depending on eligibility, employers could benefit from:

• reduced apprenticeship training costs
• additional financial support for recruitment
• stronger talent pipelines
• improved workforce planning
• greater access to future skills

Apprenticeships can also support more than entry-level recruitment. They can help organisations develop existing employees and address emerging skills needs as part of a wider workforce strategy.

Building a future-ready workforce through apprenticeships

Whether you’re looking to recruit new talent, develop existing employees or address emerging skills gaps, apprenticeships can play an important role in your workforce strategy.

With increased funding support, employer incentives and reduced financial barriers available, now is a valuable time to review the apprenticeship opportunities available to your organisation.

At Davies, we work with employers to identify appropriate apprenticeship pathways, maximise available funding and develop talent strategies that align with long-term business objectives.

Speak to the Davies team about how apprenticeships could support your workforce strategy.

Frequently asked questions about apprenticeship funding

What apprenticeship funding is available to employers in 2026?

Funding depends on factors including whether an employer pays the Apprenticeship Levy and the circumstances of the apprentice. The 2026–27 funding rules cover employer funding, co-investment and additional payments for eligible apprenticeships. [gov.uk], [assets.pub…ice.gov.uk]

Do employers have to pay for apprenticeship training?

Not always. Government funding or available levy funds may cover some or all eligible apprenticeship training and assessment costs. Where co-investment applies, the employer contributes towards the agreed training and assessment price. [customerhe…ion.gov.uk]

Can non-levy employers get apprenticeship funding?

Yes. Non-levy employers can receive government support towards eligible apprenticeship training costs, with the level of funding depending on the applicable funding rules and apprentice’s circumstances. [gov.uk], [customerhe…ion.gov.uk]

Are there incentives for hiring younger apprentices?

Yes. Support identified in the funding information includes the Apprenticeship Hiring Payment and Young Apprentice Incentive, subject to their respective eligibility requirements.

Last reviewed: October 2026

Apprenticeship funding rules and eligibility requirements can change. Employers should check the latest government guidance and individual eligibility requirements before making funding decisions.