Young starts now cost employers nothing toward training; older starts at a spent levy payer cost 25%. A dated list of every change, and how to plan a year around both.
Apprenticeship Funding Changes 2026: What Employers Need to Know
By James Cotton · Last updated · 7 min read
Part of our topic guides on Government-Funded Data & AI Training and AI Skills for Business.
By James Cotton, Founder, iO-Sphere
The rules moved in both directions at once, over some twenty months. The Department for Education's apprenticeship funding rules for 2026-27, version 3, published on 29 July 2026, hold most of them. Paragraph numbers on this page refer to that document unless another source is named.
The changes, in date order
| Date | What changed | Where it is written |
|---|---|---|
| 11 Feb 2025 | English and maths became optional for apprentices aged 19 and over | 2025-26 rules, para 43.2 |
| 1 Jun 2025 | Skills England took over the functions of the Institute for Apprenticeships and Technical Education | Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Act 2025; SI 2025/598 |
| 1 Aug 2025 | Minimum apprenticeship length cut from 12 months to 8 | 2025-26 rules, para 73; 2026-27 para 77 |
| 1 Jan 2026 | Level 7 funded only for starts aged 16 to 21, or 22 to 24 with an EHC plan or as a care leaver | 2025-26 rules, para 28; 2026-27 para 32 |
| 28 Apr 2026 | Apprenticeship units (short training) became fundable | Unit rules, Aug 2026 to Jul 2027, v2 |
| 1 Aug 2026 | No employer contribution for starts aged 16 to 24 at non-levy employers | Para 214.1 |
| 1 Aug 2026 | Same rule for levy payers with insufficient funds (added in v3, 29 Jul 2026) | Para 214.2; provider may not ask, para 215 |
| 1 Aug 2026 | Starts aged 25 and over: 25% employer share at a spent levy payer, 5% at a non-levy employer | Paras 213.1 and 213.2 |
| 1 Aug 2026 | New levy funds expire after 12 months; funds already held keep 24 | gov.uk "Apprenticeship funding", updated 29 Jul 2026 |
| 1 Aug 2026 | The 10% government top-up on new levy funds ended | Para 234.1 |
| 1 Sep 2026 | Sixteen standards removed from funding | Growth and skills levy reforms factsheet, 2 Sep 2026 |
| 1 Oct 2026 | £2,000 hiring payment for non-levy employers taking on a 16 to 24 year old | Paras 133 to 137 |
The sixteen standards removed on 1 September are listed on the government's reforms factsheet of 2 September 2026, and the list is not reproduced here. If a programme you run is close to the edge of funding, that factsheet is the place to check it.
One name changed without the money changing. Where the rules describe the apprenticeship levy the government "is transforming", at paragraph 15, they call it the growth and skills levy. It is collected as before.
What got cheaper
The biggest change is the plainest in money terms. For an apprentice aged 16 to 24, an employer that pays no levy now pays nothing toward training, and neither does a levy payer whose funds cannot cover the start (paras 214.1 and 214.2). The training provider may not ask for a contribution either.
For smaller employers the step was narrower than the headline suggests. Under the 2025-26 rules a non-levy employer already paid nothing for starts aged 16 to 21. What went on 1 August was the 5% share it paid for starts aged 22 to 24, which the government announced on 11 May 2026 as "abolishing the 5% co-investment rate". The extension to levy payers followed on 28 July 2026.
An older incentive still stands. The £1,000 each for employer and training provider, when the apprentice is 16 to 18 at the start, continues unchanged from paragraph 125.
Smaller firms gain two further savings. From 1 October 2026 a non-levy employer taking on a new apprentice aged 16 to 24 can claim a £2,000 hiring payment, paid in halves, with the first landing from January 2027. Its conditions, and the National Insurance employers no longer pay on most under-25 earnings, are worked through in our guide to what a young apprentice costs.
What got tighter
The top end moved the other way. For an apprentice aged 25 or over, a levy payer whose funds are spent now pays a 25% share of the training. A non-levy employer pays 5% for the same start.
That makes the levy pot matter more for older staff. While funds last, they pay for the training. Once they are spent, every experienced person you put on a programme costs a quarter of the training price, on top of the narrowing of Level 7 in January.
The pot also has a shorter life. The gov.uk Apprenticeship funding page, as updated on 29 July 2026, gives levy funds arriving from 1 August 2026 twelve months before they expire. The 10% government top-up once added to new funds has ended too. A pound of levy now buys a pound of training, with a year to use it.
What is new in shape
Two formats now run alongside the full apprenticeship. Foundation apprenticeships are for people aged 16 to 21, or 22 to 24 with an EHC plan, care-leaver status or prison-leaver status.
Where the standard includes an employer incentive, the rules pay it in three parts under paragraph 172: £667 at 90 days, £667 at 242 days, and £666 if the apprentice moves onto a full apprenticeship with the same employer within six months. The last part goes only to an employer who keeps the person on.
Apprenticeship units are short training, fundable since 28 April 2026. Version 2 of the unit rules for August 2026 to July 2027 opens them to employed learners aged 19 and over, running from 1 to 16 weeks and covering 30 to 140 hours.
A non-levy employer's units are funded in full. At a levy payer whose funds are spent, the government pays 75% for learners aged 25 and over, a share the unit rules fix at their paragraph 74. Levy transfers can now pay for units as well.
Reading both directions
The reforms push against a clear pattern. Department for Education figures published on 16 July 2026 put under-25s at 47.7% of the 308,770 starts in 2025/26 so far, and 51.3% of 2024/25 starts were aged 25 or over.
Most starts, in other words, have been older learners. The new rules make young starts cheaper and older ones dearer once the levy runs out. An employer who reads only one half will plan the wrong year.
A non-levy employer faces the gentler version, 5% for an older start and nothing for a young one. The sharper choice falls to a levy payer, whose pot now expires faster and no longer grows by a tenth.
For a levy payer, the arithmetic points one way. An older start that falls after the pot is spent costs 25%; a young start in the same position costs nothing. If the pot will not stretch to every start you plan, it does most good spent on experienced people, with young starts placed against the government funding they attract once it is spent. That order, settled before the year's first start, is the plan, and our apprenticeship routes run at Level 3 to 5 for both groups.
Frequently asked questions
How do I know whether we pay the levy?
It depends on your pay bill, never your headcount. The levy is 0.5% of the annual pay bill, less a £15,000 allowance, so only an employer whose pay bill is over £3 million ends up paying it. Below that line you are a non-levy employer for every rule on this page, however many people you employ. The rate and the allowance did not change in the reforms.
What happens to levy funds already in our account?
Funds that were in your account before 1 August 2026 keep their 24-month life. Only funds arriving from that date expire after 12 months. Your account therefore holds balances on two clocks for a while, and the older ones still run out on their own dates.
Can we still transfer levy funds to another employer?
Yes. Paragraph 234 lets a levy payer transfer up to 50% of its funds a year to other employers, and those transfers now cover apprenticeship units as well as full apprenticeships; gov.uk's transfer guidance sets out the steps. With new funds expiring after 12 months, a transfer is one way to use a balance your own plans will not reach in time.
What counts as "insufficient funds"?
The rules use two phrases for it: a levy payer with insufficient funds for young starts, and a levy payer whose funds are spent for older ones, in paragraphs 214.2 and 213.1 respectively. In plain terms, it is a levy account that cannot cover the cost of the start. At that point a 16 to 24 year old costs you nothing toward training and an apprentice aged 25 or over brings the 25% share.
Build a data-literate workforce
Data apprenticeships funded through the Growth & Skills Levy: £0 for any apprentice under 25, and most of the cost covered for older starts.