How to Hire a Young Person in 2026: The Incentives and Who Gets Them

Part of our topic guides on Data & AI Apprenticeships and Government-Funded Data & AI Training.

By James Cotton, Founder, iO-Sphere

The levy test, and what comes on top

HMRC's guidance says an employer pays the apprenticeship levy, a charge on larger pay bills that funds the payer's own apprentices, when its annual pay bill, counted with any connected companies or charities, is over £3 million; headcount plays no part.

Below that line, the apprenticeship funding rules for August 2026 to July 2027, which apply in England, fund all the training and assessment on starts from 1 August 2026 for an apprentice aged 16 to 24 at the start of training (paragraph 214).

Your provider must not ask you for any contribution up to the funding band, the most government funding pays for that apprenticeship; above it, you pay the difference (paragraph 215). A levy payer with funds pays from its own account.

On wages, HMRC's rates for 2026 to 2027 set 0% employer National Insurance on pay up to £50,270 a year for any employee under 21 and any apprentice under 25, lowering the cost of hiring a young apprentice. Three payments can come on top; the Jobs Guarantee is a separate route.

Payment	Who qualifies	When it is paid
£2,000 hiring payment (England)	New hire aged 16 to 24, employer outside the levy	Halves at 90 and 365 days in training
£1,000 additional payment (England)	Aged 16 to 18, or 19 to 24 with care experience or an Education, Health and Care (EHC) plan; new or existing staff	Halves at 90 and 365 days
£3,000 Youth Jobs Grant (Great Britain)	Aged 18 to 24, six months or more on Universal Credit, via the jobcentre	£1,800 after the week 6 check, £1,200 after week 18
Jobs Guarantee wage support (where it runs)	Aged 18 to 24, 18 months on Universal Credit and looking for work	Reimbursed over the six months

Who qualifies for the £2,000 hiring payment

Paragraph 133 of the funding rules pays £2,000 when all five of these hold at the start of training:

You do not pay the levy.
The apprentice is aged 16 to 24.
The practical period, the training period dated in their apprenticeship agreement, starts on or after 1 October 2026.
They are on the PAYE scheme linked to the apprenticeship service account funding the training.
You have employed them for no more than 90 days before the practical period starts.

Foundation apprentices are included. Age is tested once, at the start of training, so turning 25 later does not end eligibility; a practical period that began before 1 October 2026 does not qualify, whatever the hire date. Staff employed for longer fall outside it, though an apprenticeship for an existing employee is still open to them.

The job can start first: under paragraph 72.4, training usually follows within two to three weeks, and the 90 days run to the practical period's start. On our reading, the 90 days count from the first day of employment, about three months; the rules print no day-count method, and DWP's check of HMRC data decides.

The previous government announced the payment in DWP's release of 16 March 2026 as "an Apprenticeship Incentive of £2,000". DWP launched it in a release of 1 October 2026, DfE's update of 7 October told providers it is "now available", and the Budget of 28 October 2026 confirmed funding for "a £2,000 apprenticeship hiring payment" (paragraph 5.22).

How the £2,000 reaches you

There is no application. DWP checks your HMRC PAYE data against what your provider reports (paragraph 136), so the apprentice must be paid through the PAYE scheme linked to your apprenticeship service account. The Apprenticeship Service help centre says a check that cannot confirm eligibility is repeated three times, 30 days apart, after which the apprentice is no longer eligible.

Your account will show one of three statuses: "Checking employment status", "Eligible" or "Not eligible". DWP's technical funding guide adds that the money is not taken from the account and sits outside the funding band.

Paragraph 137 pays £1,000 at 90 days in learning and £1,000 at 365 days, each via your provider in the month after, only while the apprentice is still employed by you and on the apprenticeship. The second half comes at 242 days on a foundation apprenticeship (a Level 2 programme for 16 to 21-year-olds, and some aged 22 to 24) or one with a published typical duration under 12 months.

Where the typical duration is 12 months or more and the apprentice finishes in under 12, the second half is not paid. Your provider must pass each half on in full within 30 working days, with no invoice from you (paragraph 138); three unanswered requests for your bank details over three months send it back to DWP.

A break in learning delays a payment until 90 or 365 days in learning are reached. The help centre says "the earliest payments to training providers will be made from January 2027", and GOV.UK's employer guide says the money can go on any cost of the apprentice's employment, such as work equipment, travel or uniform.

DWP can change or withdraw the payment during the funding year, with at least three months' notice and continued payments for apprentices already eligible (paragraph 135). The current rules cover starts up to 31 July 2027.

£1,000 more at 16 to 18, and for care leavers

Paragraph 125 adds £1,000 for you and £1,000 for the provider when the apprentice is 16 to 18 at the start of training, or 19 to 24 and has an EHC plan or is or has been in local authority care. It reaches existing staff as well as new hires, where the £2,000 is for new hires only.

It is paid via the provider in halves at 90 and 365 days, while the apprentice is still on the apprenticeship. A care leaver also has a £3,000 bursary paid to them, tax free and not counted as income for Universal Credit (paragraph 127).

For a 16 to 18-year-old without a suitable qualification, English and maths up to Level 2 are a mandatory, funded part of the programme; from 19, on a data analyst apprenticeship as on any other, they are optional (paragraph 47).

The £3,000 Youth Jobs Grant

The Youth Jobs Grant pays up to £3,000 per job for hiring an 18 to 24-year-old who has been on Universal Credit for six months or more and is looking for work. Open across Great Britain since 30 June 2026, it is applied for through the Find a Grant service, assessed by DWP and separate from the Jobs Guarantee.

The young person comes through the jobcentre. You register the vacancy and have it accepted, DWP work coaches refer candidates, you run your own selection and you send DWP a pre-start form. DWP's employer FAQ says you cannot recruit your own candidate and then claim.

Applicants need operations in Great Britain, six months' trading, an active PAYE scheme and a D-U-N-S Number, which is free; central government departments cannot apply. Funded employees are capped at one at a time with 0 to 3 staff, two with 4 to 9, and 20% of the workforce at 10 or more.

The job must be genuine paid work of at least 25 hours a week for at least 16 consecutive weeks, at the applicable minimum wage or above, displacing nobody, and under the grant's Terms and Conditions not made up of 50% or more online training.

DWP pays £1,800 when its week 6 check of HMRC's Real Time Information payroll data shows at least 50 hours worked, and £1,200 when the week 18 check shows at least 300; it aims to pay within 10 days of verifying.

The FAQ says the grant "may be layered" with the apprenticeship payments, the £2,000 included, for a vacancy enrolled on the grant and filled as an apprenticeship, which works only when the vacancy is registered before you recruit and the hire comes through the jobcentre. You declare the apprenticeship funding when you apply, and the grant covers no cost DWP or another public body already funds.

The grant guidance says the scheme aims to support up to 60,000 jobs over three years, closing to new vacancies in October 2028, and that DWP may reject vacancies to stay in budget.

The Jobs Guarantee

The Jobs Guarantee serves a different young person, an 18 to 24-year-old who has been on Universal Credit and looking for work for 18 months: it guarantees them a fully funded six-month paid job, and someone eligible for it cannot be a Youth Jobs Grant hire. DWP expects it to support over 90,000 young people over three years.

As business.gov.uk sets it out, the employer is reimbursed for 25 hours a week at the age-relevant minimum wage for six months, with employer National Insurance and minimum pension contributions covered. A Delivery Partner, the organisation running the scheme locally, matches young people to the job.

Phase One ran in six areas and is closed to applications, and the rollout across 25 areas is not live yet: DWP says it goes live "later in 2026". On 21 October 2026 DWP named preferred London delivery partners, subject to grant agreements.

How high the payments go for one hire

Apprenticeships.gov.uk says an employer outside the levy "can receive up to £8,000 in payments", combined where eligible for the same apprentice. Foundation apprenticeships are Level 2 programmes for 16 to 21-year-olds (22 to 24 with an EHC plan, care experience, or in or leaving prison), and the £2,000 foundation incentive, where a standard carries one, is the piece only they bring.

By our sum, the £8,000 is the £1,000 additional payment, the £2,000 foundation incentive, the £3,000 Youth Jobs Grant and the £2,000 hiring payment, and all four meet only for an 18-year-old, or a 19 to 24-year-old with an EHC plan or care experience, recruited through a Youth Jobs Grant vacancy onto a foundation apprenticeship at an employer outside the levy.

On a Level 3 to 5 apprenticeship at an employer outside the levy, a new hire brings £3,000 at 16 to 18 and £2,000 at 19 to 24, or £3,000 with an EHC plan or care experience. A hire recruited through the grant reaches £5,000 at 19 to 24, and £6,000 at 18 or at 19 to 24 with either. Each payment has its own conditions and schedule.

Where to find the young person

The Office for National Statistics estimated that 981,000 people aged 16 to 24 in the UK were NEET, not in education, employment or training, in April to June 2026: 13.0% of the age group. Of them, 393,000 were unemployed and 588,000 economically inactive.

On DWP's Youth Guarantee Journey, a young Universal Credit claimant works with a work coach and after 13 weeks must agree to work, an apprenticeship, work experience, a sector-based work academy programme (SWAP), training or education.

Business.gov.uk gives the way in: the Jobcentre Plus Employer Services Line, 0800 169 0178, or the online form, after which a local recruitment consultant calls back with no-fee help, provided you have a vacancy; consultants can also lend jobcentre rooms for interviews. DWP's guide for recruiters adds that they can sift applications and interview candidates for you, and "Find a job" advertises the job free.

Youth Hubs bring Jobcentre Plus, local authority services, employers and training providers together, and DWP said on 21 October 2026 that the government is expanding them to over 360 local areas over three years.

Our Skills Bootcamp graduates are another free place to find candidates: people who finished our data analytics bootcamps in London (funded by the Mayor of London through the Greater London Authority) or Oxford (funded by DWP), or one of our Higher Technical Qualification (HTQ) programmes, with no placement fee.

Trying someone out before you hire

Jobcentre Plus work experience is an unpaid placement of 1 to 8 weeks, open to every 16 to 24-year-old: the participant keeps their benefits, DWP covers travel and childcare where needed, and you pay nothing. Offer an apprenticeship and it can run up to 4 weeks longer, to 12 weeks at up to 30 hours a week.

Placements must be additional to existing or planned vacancies, with nobody dismissed to make room. A work trial, agreed with Jobcentre Plus beforehand, is for a jobseeker you have interviewed: at most 5 days for a job under six months, or 30 (usually around 5) for a longer one, with benefits kept and no wage paid.

A SWAP of up to six weeks combines pre-employment training, a work placement and a guaranteed interview or help with your recruitment, for jobseekers aged 18 and over in England and Scotland, at no direct cost to you; the training is fully funded by government. DWP's guide suggests taking a part-qualified participant on as an apprentice.

Someone who has done work experience or a SWAP can still be referred to a Youth Jobs Grant vacancy, though DWP's FAQ says the placements "do not meet the requirement for paid employment".

Taking on the apprentice

You can advertise the vacancy through your apprenticeship service account; outside the levy, you reserve the funding up to three months before the start. The earliest start is after the last Friday in June of the school year in which the person turns 16, and at least half their working hours must be in England, remote and hybrid workers included.

The rules require a separate, identifiable line manager and a signed apprenticeship agreement setting the practical period's start and end dates and the time for off-the-job training, the training an apprentice does within normal working hours, which is a statutory requirement. The provider holds progress reviews at least every three months, which the employer attends.

With us, the line manager's first four weeks bring the training plan to sign, a launch call, the date of the first weekly coaching session and the first review date, and a coach leads a three-way review every three calendar months. In our view, from delivering these programmes, the rules set the minimum, and an apprenticeship is as good as what the manager adds above it.

What the last hiring incentive changed

The last apprenticeship hiring incentive, for new recruits only, ran from August 2020 to January 2022: £2,000 for a new apprentice under 25 and £1,500 for one aged 25 and over until March 2021, then £3,000 at any age. DfE's 2021 employer survey, run by IFF Research with 4,085 employers in England from 24 May to 6 August 2021, asked what it changed.

Of the 890 employers surveyed in 2021 that received or expected it, 76% said they would have recruited the same number anyway and 22% that it made them recruit more, including 14% who would otherwise have recruited none. DfE estimated about a 6% rise in apprentice numbers, net of recruitment brought forward.

Sites with 10 to 99 employees were likelier than those with 100 or more to say it raised their recruitment (26% against 14%). Of those who did not act on it, 69% said they had no work for more apprentices; 3% said it was too low.

Start from the young person's situation

Our advice is to have the work for a young person first, and then let their situation choose the route and the money.

Leaving school or college at 16 to 18: the government's apprenticeships.gov.uk, with the training free outside the levy, and the £2,000 hiring payment and the £1,000 additional payment for a new hire.
Not ready for a job yet: a placement first, through Jobcentre Plus work experience or a SWAP, at no direct cost to you while the young person keeps their benefits.
18 to 24 and on Universal Credit for six months or more: the jobcentre first, with the vacancy registered for the Youth Jobs Grant before you recruit, then filled as an apprenticeship so the £2,000 hiring payment adds to the £3,000.
18 to 24, on Universal Credit and looking for work for 18 months: the Jobs Guarantee, through its Delivery Partner where the scheme runs, with six months of wage support.
19 to 24 and starting in data or AI work: our apprenticeships, from Data & AI Essentials (Level 3) to Data Engineering (Level 5), with the £2,000 at an employer outside the levy when training starts within 90 days of the job.
Already on your staff for more than 90 days: no £2,000, though an apprenticeship for an existing employee is still free outside the levy if they are 16 to 24 when training starts, with the £1,000 where it applies.

Frequently asked questions

Does an employer receiving levy transfer funds still get the £2,000?

Paragraph 134 extends the hiring payment to an employer that pays no levy and uses a levy transfer, money a levy payer moves from its apprenticeship service account to fund another employer's apprentice, provided paragraph 133 is met. Apprenticeships.gov.uk's funding tool tells a receiver to answer "Yes" to the £3 million pay-bill question; paragraph 134 applies all the same. A levy-paying receiver is not covered.

What happens to the payments if the apprentice leaves?

The first employer keeps any hiring payment already made, according to DWP's technical funding guide; under paragraph 141, a new employer that takes the apprentice on to continue the same apprenticeship receives the remaining balance if it meets the criteria. DWP does not recover the Youth Jobs Grant's £1,800 first payment when the young person leaves after it, unless the employer has breached the grant's terms.

Do Kickstart and traineeships still run?

Kickstart, which paid for six-month, 25-hour-a-week jobs for 16 to 24-year-olds on Universal Credit at risk of long-term unemployment, ran from September 2020 to March 2022. Traineeships in England took no new starts after 31 July 2023, when 19 to 24 provision moved into adult education. DWP's 2024 impact assessment counted 163,000 placements, with 11 more of every 100 participants in unsubsidised work two years on than similar non-participants.