AI Training for Small Businesses in the UK: What Is Free, What Is Funded and What Is Worth Paying For

Part of our topic guides on AI Skills for Business and Government-Funded Data & AI Training.

By James Cotton, Founder, iO-Sphere

AI use by firm size, September 2026

On 8 October 2026 the Office for National Statistics (ONS) published figures for September 2026 from a voluntary survey of private-sector businesses, answered by 9,933 between 21 September and 4 October and issued as official statistics in development. They show 38% of businesses with 10 or more employees using at least one AI technology, and 51% of those with 250 or more, up from 19% in September 2023.

A firm of 10 to 100 people sits in the middle bands of the bulletin's chart data, where businesses not sure whether they use AI are not counted as users.

Employees	Using AI, September 2023	Using AI, September 2026
0 to 9	9.1%	28.7%
10 to 49	11.3%	36.1%
50 to 99	14.5%	45.8%
100 to 249	15.0%	50.4%
250 or more	18.7%	50.9%

In both years the share rises with every size band. Worked out from the table, the gap between firms of 10 to 49 people and those of 250 or more is about 7 points in September 2023 and about 15 points in September 2026, so large firms are taking up AI faster.

Asked what had prevented or delayed AI adoption in the previous three months, businesses with 10 to 49 employees name the level of AI expertise more often than any other factor listed (13.0%), ahead of cost (11.2%), in the dataset published with the September 2026 figures. In the same band, 40.5% say nothing has, and 19.3% have not attempted to use AI.

How small firms are building the skill

ONS also asks how businesses bring AI skills into their workforce. In its June 2026 figures for businesses that use AI or are not sure whether they do, training or retraining existing staff is reported more often than recruiting new staff with AI skills or automating or replacing roles, in every size band.

In ONS's September 2026 figures, among businesses with 10 to 49 employees that use AI or are not sure whether they do, 37% are training or retraining existing staff, 5% have recruited staff with AI skills, and 38% say no staff have been trained, up from 34% in June.

For businesses of that size that use AI or are not sure whether they do, we make it about 11.5% that have trained more than half their staff in September 2026, adding ONS's two highest columns (more than 75%, and 50% to 75%).

In a survey of employers by the Department for Science, Innovation and Technology (DSIT), run from March to June 2024, the main barrier to AI training was being unsure what training is relevant to the business, cited by 50% of employers; lack of time (47%) and cost (41%) followed.

Deciding what AI literacy training should cover settles that question; the rungs below set out what each kind of training costs.

The free rung: what costs nothing

The previous government expanded AI Skills Boost in January 2026: free AI courses from government and industry, some taking under 20 minutes, with a target of key AI skills for 10 million workers by 2030 that included at least 2 million SME employees. By June 2026 it had passed 1.7 million courses completed.

The courses are benchmarked against Skills England's AI foundation skills for work (January 2026), which run from writing clear instructions for AI tools, a technical skill, to understanding the risks and consequences associated with AI use, a responsible and ethical one.

When we read this guide's sources on 8 October 2026, Google's old Digital Garage address led to Google's UK page headed "Free digital skills training", and Microsoft says Microsoft Learn training is free to anyone interested in its products.

Business Academy on business.gov.uk is free to join, says over 30,000 businesses are benefiting from its training, and has a 16-minute session on using technology and AI to improve cash flow.

Help to Grow: Management Essentials is free too, and teaches business concepts: 17 videos of 5 to 7 minutes, with a certificate. From April 2024 to March 2026 it had 5,465 registrations and 495 completions of all its modules, the scheme's statistics show.

In England, GOV.UK's business support page also lists the Business Support Service helpline (0800 998 1098) and free advice through local growth hubs.

What this rung leaves is a person who can use an AI tool and write clear instructions for it. None of these courses is built on your firm's own jobs.

The government-backed rung: management, grants and advice

Help to Grow: Management is a management and leadership course. GOV.UK lists it for UK businesses with 5 to 249 employees that have traded for more than a year, with a £750 joining fee. A firm of 10 to 249 people can send up to two participants; charities are not eligible.

The Small Business Charter, which delivers it, calls it 90% funded and runs it as 50 hours over 12 weeks, with 10 hours of one-to-one mentoring. The same statistics record 14,420 enrolments and 11,915 completions from June 2021 to March 2026, 46.9% of enrolments from firms of 10 to 49 employees (counts rounded to the nearest 5).

Made Smarter Adoption gives SME manufacturers and engineering firms in nine English regions fully funded advice and planning, and grants of up to 50% towards adopting hardware and software. In London the grant is up to £20,000, 50% match funded.

In June 2026 the previous government said it would expand Innovate UK's BridgeAI with £100m. Its next phase opens with a London event on 26 October 2026, where attendees begin forming consortia ahead of a Phase 1 competition. The event is for "medium or large UK-registered businesses and public sector organisations" exploring AI, and for "UK-registered AI technology developer SMEs with an existing AI or ML solution".

The SME Digital Adoption Taskforce's final report (July 2025) set an ambition for UK SMEs to be the most digitally capable and AI-confident in the G7 by 2035. The report found that short, practical sessions showing specific AI applications within job roles can increase employee confidence.

It also found that SMEs with clear internal policies permitting AI use are more likely to adopt AI tools; our guide to AI governance for smaller firms covers what those rules hold.

In a June 2026 update, the previous government said it had accepted the taskforce's recommendations, was providing expert advisers through Growth Hubs, and would announce further support packages later that year.

In 2024 one pilot set out to subsidise AI training directly. The Flexible AI Upskilling Fund, a £7.4 million scheme announced in March 2024, let SMEs in professional business services apply for up to 50% of the cost of AI skills training. It closed to applications on 18 August 2024.

Ipsos's process and baseline phase report for DSIT (January 2026) found the fund had set out to fund training for 4,300 employees in 2,000 businesses. Of 553 applicants, 327 were approved and 181 of those (55%) submitted a claim; £381,096 of grant funding was awarded against the £7.4 million allocation.

The training businesses applied for was typically 1 to 7 days long, and having to source their own training was a barrier for some. The evaluators suggested future programmes might consider a list of pre-approved courses, or support to identify AI skills needs and find training.

So for a firm of 10 to 100 people outside manufacturing, what fits on this rung is Help to Grow: Management, which teaches management and leadership, and advice from a growth hub; neither is AI training. Made Smarter is for manufacturers and engineering firms, the fund closed in 2024 and the taskforce wrote recommendations, so none of those applies. BridgeAI's launch event is for the groups quoted above.

The apprenticeship for a firm outside the levy

The apprenticeship levy is a charge of 0.5% of an employer's annual pay bill, and HMRC's guidance Pay Apprenticeship Levy applies it only where that pay bill is more than £3 million, with connected companies' pay bills combined. Headcount alone does not decide it. Firms over the line will want what the 2026 levy reforms changed.

For a firm that does not pay it, the apprenticeship funding rules for August 2026 to July 2027 (version 3) set the cost by the apprentice's age at the start of training. For apprenticeships starting on or after 1 August 2026, the government funds all training and assessment costs for an apprentice aged 16 to 24 (paragraph 214.1), and 95% for one aged 25 or over (paragraph 213.2).

Both stop at the funding band, the cap on what the funding covers for a given apprenticeship standard. Up to the band, the provider must not ask a fully funded employer for any contribution (paragraph 215); where the agreed price is above it, the employer pays the difference in full (paragraph 215.1).

Skills England lists the band for the Business analyst standard (Level 4) at £18,000 and for the Data technician standard (Level 3) at £13,000. At a price equal to the band, 5% for an apprentice aged 25 or over comes to £900 and £650; for one aged 16 to 24, the employer pays nothing.

Paragraph 133 adds a £2,000 hiring payment for non-levy employers from October 2026. The apprentice must be 16 to 24 at the start of training, have an apprenticeship agreement whose practical period starts on or after 1 October 2026, be on the PAYE scheme added to the firm's apprenticeship service account, and have been employed by the firm for no more than 90 days before that date.

The payment comes through the provider in halves, 90 and 365 days after learning starts (paragraph 137), with the second half at 242 days on a shorter or foundation apprenticeship. Paragraph 135 lets it be changed or withdrawn during the funding year on at least three months' notice.

Employer National Insurance favours the younger apprentice too. HMRC's rates and thresholds for 2026 to 2027 set an "Apprentice upper secondary threshold (apprentice under 25)" of £50,270 a year, against a £5,000 secondary threshold above which employers pay 15%. We add the pieces up in what a young apprentice costs an employer.

Apprenticeship units are shorter: separately approved blocks of training, each with its own minimum hours and funding rate. Skills England has approved three Level 5 AI leadership units (AI strategy and opportunity; AI adoption, procurement and governance; AI delivery and organisational transformation), each with a 30-hour minimum and up to £750 of funding.

For a firm outside the levy, the apprenticeship unit funding rules fund all of a unit's training and assessment costs at its funding rate (paragraph 92), for learners aged 19 or older at the start (paragraph 22.1).

Skills Bootcamps at 10% of the cost

Skills Bootcamps are courses of up to 16 weeks for adults aged 19 and over, and offer participants a job interview on completion. On the government's employer schemes service, a business with 1 to 249 employees pays 10% of the training cost to put an existing employee through one, and 30% at 250 or more. Recruiting someone who has completed one costs nothing.

Paying for training built on your team's work

A firm with the budget can start at the top rung and pay for training built on its team's own work. Nothing on the lower rungs has to come first.

At iO-Sphere we run custom programmes and team training, data and AI fluency among them, on the team's own tasks, priced per engagement. Our apprenticeships include Data & AI Essentials (Level 3), Advanced Data & AI (Level 4) and AI Transformation (Level 4). An employer with one or two people joins an open cohort; there is no minimum.

iO-Sphere has trained 1,000+ learners in data and AI since 2022, and is rated 4.8 out of 5 on Google.

What we would recommend, by the shape of the firm

A firm of about ten. Start everyone on AI Skills Boost and Business Academy's cash-flow session, which cost nothing. Send the owner on Help to Grow: Management for the management it teaches. If you are about to hire, hire an apprentice under 25 into an open cohort: the training costs you nothing up to the band, and the hiring payment adds £2,000 if its conditions are met.

A firm of twenty with one person who could own the data. Put that person on an apprenticeship such as Advanced Data & AI, matching the standard to the duties of their role, whatever the role is called. At 25 or over the firm pays 5% of the price up to the band, and under 25 nothing; their colleagues can start on the free courses.

A firm of eighty with the budget for training on its own work. Check first whether your pay bill passes £3 million, because that decides whether you pay the levy. Then buy a custom programme built on the team's own tasks, and add apprenticeships for the one or two people who will take the work furthest.

Whoever leads the change can take one of the AI leadership units, funded in full at the unit's rate if you pay no levy, and planning AI skills across the whole workforce sets out who learns what.

Frequently asked questions

Can I get the £2,000 hiring payment for someone already on my staff?

Only if they joined you no more than 90 days before their practical period starts and are 16 to 24 (paragraphs 133.1 and 133.4 of the funding rules, with the other two conditions in paragraph 133). Paragraph 133.4.1 also admits starters of 1 or 2 July 2026 whose training begins by 1 October 2026. For longer-serving staff, funding turns on age at the start: see our guide to apprenticeships for existing employees.

Is Help to Grow: Management an AI course?

No. GOV.UK lists its training topics as leadership, marketing, employee engagement and financial management. One provider's page shows its own module list: the University of Liverpool's cohort from 9 November 2026 to 8 March 2027, at £750 a participant, includes a module called "Digital Transformation".

Can a sole trader use the free routes?

Yes for AI Skills Boost: "Every adult in the UK is eligible", the previous government said in January 2026. Business Academy says it is completely free to join, and Help to Grow: Management Essentials is a free online course. The 5 to 249 employee condition belongs to the full Help to Grow: Management course.

Can a levy transfer pay for our apprentice?

Yes, if a levy payer agrees to send one. It can currently transfer up to 50% of its funds (paragraph 234), and a transfer should cover 100% of eligible training and assessment costs up to the band, for the whole apprenticeship (paragraphs 236 and 237). That covers the 5% you would pay at 25 or over, and you keep the hiring payment if you meet its conditions (paragraph 134).