Apprenticeship funding changed on 1 August 2026. If you employ apprentices, or you are thinking about it, here is how the funding works now, in plain terms.
How it works now
There are two routes, depending on your payroll.
If your annual payroll is over £3 million, you pay the apprenticeship levy: 0.5% on the payroll above that line. The money sits in a digital account and can only be spent on approved apprenticeship training. For funds that enter your account from August 2026, you have 12 months to spend them before they expire. You can also transfer up to 50% of your unused levy to another employer to cover their training costs.
If your payroll is under £3 million, you are a non-levy employer. From 1 August 2026:
- If your apprentice is aged 16 to 24 at the start of their training, the government funds 100% of the training and assessment, up to the funding band maximum.
- If your apprentice is 25 or over, the government funds 95% and you pay the remaining 5%.
There are a range of financial incentives available to employers who recruit apprentices. These include £1,000 for all employers who recruit an apprentice aged between 16-18 (or 19-24 with an EHCP), as well as from October 2026, non-levy employers can also receive a payment of up to £2,000 for taking on a new apprentice aged 16 to 24.
In every case, the apprentice’s wage is paid by you. It is a normal employment cost and is not covered by the levy or by government funding.
If you are a levy payer and run out of funds
If you use all the money in your levy account and want to train more apprentices, the government will pay the remaining fees if the apprentice is under 25. If they are over 25, then you pay 25% of the additional cost and the government pays the remaining 75%. With the spending window now at 12 months, it is worth planning your training so funds are committed before they expire.
What this means for a small or mid-sized business
For most small and mid-sized businesses the economics are straightforward, and for many they have improved. If your apprentice is 16 to 24, the training is fully funded. The main cost is the wage. A Level 3 marketing or IT apprentice typically earns between £18,000 and £22,000 in the first year. Set against the work they do from day one, running campaigns, handling support, producing content, that is a competitive cost for a business of any size.
How Vocate handles the funding for you
We work with employers across both routes. We handle the funding registration, the levy account setup, and the digital account reconciliation. We have cut our own paperwork down to four short forms. You get a clear answer on what you qualify for, based on your payroll and the courses you want.
Find out what you qualify for
If you want to know exactly what your business is entitled to, get in touch and we will give you a straight answer. No obligation, just a clear picture of the numbers.
