Apprenticeship Funding & Employer Support (with updates from August 2026)

Overview

Apprenticeships in England are designed to help employers recruit, train, and develop staff through government-supported funding. From 1 August 2026, updated funding rules apply from the Department for Work and Pensions (DWP).
These changes aim to:
•    Increase investment in young people (under 25)
•    Simplify funding arrangements
•    Provide greater flexibility for employers
•    Improve workforce development and skills

1. How Apprenticeship Funding Works

Employers access apprenticeship funding in two main ways depending on whether they pay the Growth and Skills Levy (formerly the Apprenticeship Levy).

a) Levy-Paying Employers

Employers with a pay bill of over £3 million contribute to the Growth and Skills Levy.
Funds are held in a digital Apprenticeship Service (DAS) account
Used to pay for:
Training and Assessment up to the funding band maximum

From August 2026:
The 10% government top-up is removed
Funds expire after 12 months
If levy funds are insufficient:
•    Employer pays 25% (previously 5%)
•    Government pays 75% (previously 95%)

New 16-24 Exception

Any new 16-24 apprentice starts will not be subject to any co-investment contribution when levy funds expire. This only applies to those with a start date after 1st August 2026.

Employers must manage their levy funds carefully to avoid expiry and increased co-investment costs. It is important to check and forecast payments from your digital Apprenticeship Service (DAS) account.

b) Non-Levy Employers (SMEs)

Employers who do not pay the levy receive government co-investment support towards the cost of Training and Assessment up to the funding band maximum.
 
From August 2026:
Apprentices aged under 25
•    100% government-funded training and assessment up to the funding band maximum
Apprentices aged 25+
•    Government pays 95%
•    Employer pays 5%
This makes apprenticeships a zero-training cost option for most young recruits.
 
2. Employer Incentives for Recruiting Apprentices

Employers can access a range of financial incentives, many of which can be combined.

a) £1,000 Young Apprentice Incentive (Existing Incentive)
Employers will receive:
£1,000 per apprentice if the apprentice is:
Aged 16–18, OR Aged 19–24 and has an Education, Health and Care Plan (EHCP), or has been in local authority care
Paid in 2 instalments:
£500 after 90 days after enrolment date
£500 after 12 months on programme
Applies to all employers (levy and non-levy)

b) £2,000 SME Hiring Incentive (New Incentive from October 2026)
Non-levy employers can receive:
£2,000 for each new apprentice aged 16–24*
*Full Rules to follow. The apprentice must be recruited as a new employee to the business a maximum of 3 months before the apprentice enrolment date. This is checked by HMRC.
This is additional funding and does not replace the £1,000 incentive

c) New £3,000 Youth Jobs Grant
The Youth Jobs Grant is a government initiative designed to encourage employers to recruit young people who have experienced prolonged unemployment and are claiming Universal Credit.

What is available?

Employers may be eligible for a £3,000 grant when recruiting a young person aged 18 to 24 who has been claiming Universal Credit for six months or more.
The grant is intended to help employers with the costs of recruitment, training, onboarding and supporting a young employee into sustained employment.

How does it work?

Eligible candidates are typically identified through local Jobcentre Plus teams.
Employers should contact their local Jobcentre or Employer Adviser to check current eligibility requirements and application arrangements.
The grant is separate from apprenticeship funding and can be used alongside apprenticeship programmes where eligibility criteria are met.

Can it be combined with apprenticeship incentives?

Yes. Where an apprentice meets the eligibility criteria, the Youth Jobs Grant can potentially be combined with other apprenticeship incentives:
1)  £2,000 SME Hiring Incentive (for eligible non-levy employers)
2)  £1,000 Young Apprentice Incentive (for eligible 16-18 apprentices or qualifying 19-24-year-olds)
3)  This means some employers could receive up to £6,000 in combined support for recruiting a young apprentice.

Employer Tip: If you are looking to recruit a new apprentice, speak to your local Jobcentre Plus team. They may be able to help identify suitable candidates who qualify for the Youth Jobs Grant while also supporting your apprenticeship recruitment needs.

d) Incentives Can Be Combined

Employers can stack incentives, where eligible
Examples:

• 16–18 apprentice (SME):
  £1,000 + £2,000: Total = £3,000
• 18–24 apprentice (SME + Universal Credit 6M+):
  £2,000 + £3,000: Total = £5,000
• Full eligibility example (16-18 apprentice SME + Universal Credit 6M+):
  £1,000 + £2,000 + £3,000: Total up to £6,000 total support

e) Additional Cost Savings

Employers also benefit from:
•    No employer National Insurance contributions for apprentices under 25 (within thresholds)
•    Fully funded training for under 25s (SME/non-levy employers)
•    Reduced recruitment and training costs
 
3. What the apprenticeship funding covers

Apprenticeship funding supports:
•    Training delivered by an approved provider or college
•    Assessment throughout the apprenticeship programme
•    Development of required knowledge, skills, and behaviours
Full funding guidance:
Get funding for apprenticeship training (GOV.UK)
 
4. Further Information for employers (Official Sources)
Apprenticeship funding rules (2026–2027):

• https://www.gov.uk/government/publications/apprenticeship-funding-rules-and-assessment-plan-guidance-2026-to-2027
• Get funding for apprenticeship training:
  https://www.gov.uk/employing-an-apprentice/get-funding
• Apprenticeship funding overview:
  https://www.gov.uk/government/publications/apprenticeship-funding/apprenticeship-funding
• Apprenticeship employer incentives:
  https://www.apprenticeships.gov.uk/employers/financial-incentives
• Explore apprenticeship funding and support:
  https://www.apprenticeships.gov.uk/employers/explore-funding-options

Summary

Apprenticeships continue to provide a low-cost, high-impact route to recruitment and workforce development. With full funding for younger apprentices and stackable financial incentives, hiring an apprentice from August 2026 is one of the most cost-effective ways to grow your business and develop future talent. Myerscough College is one the leading apprenticeship providers in the specialist Land-based sector. We can support you every step of the way of your apprenticeships journey.