The rules around apprenticeship funding are changing in August 2026. If your business employs apprentices or is thinking about hiring one, there are a few things worth understanding before the changes come in.
This is not a reason to delay – if anything, it is a reason to act now.
How apprenticeship funding works today
There are two funding routes depending on your payroll size.
If your annual payroll is over £3 million, you pay the Apprenticeship Levy: a 0.5% contribution on payroll above £3 million. This money sits in a digital account and can only be spent on approved apprenticeship training. If you do not spend it within 24 months, you lose it.
Levy payers can also transfer unused funds to non-levy employers to help cover training costs, up to 100% of the fees.
If your payroll is under £3 million, you are a non-levy employer. Full funding is available in either of these circumstances:
• The apprentice is aged between 16 and 21
• The apprentice is aged between 22 and 24 and has an Education, Health and Care (EHC) plan, or is or has been in the care of their local authority
For all other non-levy situations, the government currently covers 95% of training costs and you pay the remaining 5% directly to the training provider.
In both cases, the apprentice’s wage is paid by you as the employer. That is not covered by the levy or the co-investment fund – it is a normal employment cost.
What is changing in August 2026
For levy-paying employers, two things are changing. First, the co-investment rate for levy payers who have insufficient funds in their account is increasing to 25%. Second, the window in which levy funds can be spent is reducing from 24 months to 12 months. Both changes mean a more deliberate training strategy is needed to avoid losing funds or running over budget.
For non-levy employers, the age threshold for full government funding is rising. From August 2026, full funding will cover apprentices aged 16 to 24, up from the current 16 to 21 limit.
What this means in practice
For most small and medium businesses, the funding changes will not dramatically alter the economics of hiring an apprentice. Even at a higher co-investment rate, apprenticeship training remains significantly cheaper than recruiting an experienced hire or commissioning external training.
The bigger cost is always the wage. A Level 3 marketing or ICT apprentice typically earns between £18,000 and £22,000 in the first year. Against the output they generate from day one -running campaigns, handling support queues, producing content – that is a competitive employment cost for a business of any size.
How to find out what you are eligible for
Vocate works with employers across the levy and non-levy funding routes. We handle the funding registration, the levy account setup, and the digital account reconciliation on your behalf.
If you want to understand what your business is entitled to before August, contact us and we will give you a straightforward answer based on your payroll size and the courses you are interested in.
No obligation. Just a clear picture of the numbers.
Contact Vocate Training to find out what funding you qualify for.
