How apprenticeship funding works in 2026/27
Apprenticeship funding has changed substantially this year:
- 1st August 2026: new funding rules changed what employers contribute towards training
- 1st October 2026: a £2,000 hiring incentive available for smaller employers
- April 2026: the Apprenticeship Levy became the Growth and Skills Levy
Four payments you can claim — and they stack
These are cash payments from government, separate from training funding. They don't come out of your apprenticeship service account and they don't reduce your levy.
| Incentive | Value | Who it's for | When it's paid |
|---|---|---|---|
| Apprenticeship hiring payment for non-levy employers New — from 1 Oct 2026 | £2,000 | Non-levy employers taking on an apprentice aged 16–24 as a new employee | Two instalments: after day 90 and after day 365 (after day 242 if the published typical duration of the apprenticeship is less than 12 months) |
| Young apprentice payment | £1,000 | Apprentices aged 16–18, or 19–24 with an EHCP or care leaver status | Two instalments: after day 90 and after day 365 (after day 242 if the published typical duration of the apprenticeship is less than 12 months) |
| Foundation apprenticeship incentive | £2,000 | Apprentices who are: • aged 16 to 21 (or 15, if their birthday falls between the last Friday of June and 31 August); or • aged 22 to 24 with an Education, Health and Care plan from their local authority, and/or who have been or are in the care of their local authority; or • aged 22 to 24 and a prisoner or prison leaver | Three instalments: after day 90, after day 242, and 90 days after the apprentice moves onto their next apprenticeship |
| Youth Jobs Grant | £3,000 | New hires aged 18–24 on Universal Credit and looking for work for six months or more | Two instalments: £1,800 after day 42 (six weeks) and £1,200 after day 126 (18 weeks) |
Terms and conditions apply. Payments depend on the apprentice remaining on programme, and a change in their circumstances can affect what's due. Where a standard's published typical duration is 12 months or more but the apprentice completes sooner, the final instalment isn't paid. Instalments reach you after we receive funds from the DWP, so allow up to 30 days beyond each milestone.
What this is worth to you
Your total depends on who you're hiring — their age, whether they're new to your business, and their circumstances before they joined.
Two examples are listed in the table below.
| School leaver, aged 17 New hire on a Level 2 apprenticeship, starting after 1 October 2026. | Foundation apprentice, aged 18 New hire on Universal Credit six months+, starting a foundation apprenticeship after 1 October 2026. | |
|---|---|---|
| Training and assessment cost | £0 — fully funded | £0 — fully funded |
| Apprenticeship hiring payment | £2,000 | £2,000 |
| Young apprentice payment | £1,000 | £1,000 |
| Foundation apprenticeship incentive | Foundation apprenticeships only | £2,000 |
| Youth Jobs Grant | Ages 18–24 only | £3,000 |
| National Insurance saving | £1,350–£1,950 | £1,950–£2,550 |
| Total | around £4,500 | around £10,000 |
National Insurance savings are based on typical apprentice salaries and will vary with what you pay.
What about apprentices aged 25 and over?
The cash incentives all stop at 24, so they won't apply. The training funding still does, as a non-levy employer you'd pay 5% of the cost and government covers the other 95%. On a £5,000 apprenticeship, that's £250 to you.
It's still one of the most cost-effective ways to develop someone, whatever their age. You're just not being paid to do it.
What if you pay the levy?
If your pay bill is over £3 million you'll be paying the Growth and Skills Levy, and your apprenticeship training comes out of your apprenticeship service account.
If you spend everything in that account, you don't lose access to apprenticeships. Government steps in and covers 100% of the cost for anyone under 25. For apprentices aged 25 and over, you contribute 25% and government pays the remaining 75%.
On a £5,000 programme that's £1,250 towards training that usually runs well over a year.
Worth knowing: levy funds now expire 12 months after they enter your account, down from 24. If your account has historically carried a surplus, this is the year to plan how you'll spend it.
Already got the right people?
How each payment works
Four schemes, and they stack, where an apprentice fits more than one, you claim more than one. None are hard to qualify for, though a couple have timing quirks worth knowing before you recruit.
Here's how each one works in practice.
-
Apprenticeship hiring payment — £2,000
For a new starter aged 16 to 24, joining you within three months of their apprenticeship beginning, from 1 October 2026. You'll qualify if your pay bill is under £3 million. Foundation apprenticeships count too.
-
Young apprentice payment — £1,000
For apprentices aged 16 to 18, or 19 to 24 with an EHCP or care leaver status. Age is taken on the day training starts, so a birthday falling either side of the start date matters, worth checking with us.
-
Foundation apprenticeship incentive — £2,000
For 16 to 21 year olds on a foundation apprenticeship, a Level 2 programme lasting at least eight months, built for young people just starting out. The final installment comes when they progress to their next apprenticeship.
-
Youth Jobs Grant — £3,000
Apprenticeships qualify for this one too, and it stacks with the incentives above. For hiring an 18 to 24 year old who's been out of work on Universal Credit for six months. You apply to the DWP before advertising and Jobcentre Plus puts candidates forward - hire through your own advert and you can't claim.
The saving that doesn't get talked about
Employers normally pay 15% National Insurance on everything a member of staff earns above £5,000 a year. For apprentices under 25, you pay nothing at all until they're earning over £50,270.
That's a real saving, every year they're with you, and it applies whether they're a new hire or someone you've moved onto an apprenticeship from your existing team.
What it's worth:
- Apprentice on £16,000 — you save £1,650 a year
- Apprentice on £20,000 — you save £2,250 a year
- Apprentice on £25,000 — you save £3,000 a year
Unlike the incentive payments, there's nothing to claim. Your payroll applies it automatically once the apprentice is on the right National Insurance category.
If your total National Insurance bill is small enough to be covered by the £10,500 Employment Allowance, you may already be paying nothing — in which case this saving won't show up separately.
Find out what you could claim
Fill in the form below and we'll tell you exactly what applies to your business, what it's worth, and when it would reach you. We handle the paperwork and the claims.