Apprenticeship funding has changed – What does this mean for your next hire?

New funding rules for apprenticeships have been introduced, impacting any apprenticeships starting after 1 August 2026.

This could affect more employers than before as apprenticeships are becoming increasingly popular, with 308,770 starts between August 2025 and April 2026, up 8.7 per cent year-on-year.

With results season over and September intakes finalised, employers weighing up apprenticeships need to understand how these changes might impact them.

What are the new rules?

The rules for apprenticeship funding change most years, so it is essential to keep up to date and be aware of how apprenticeships will be affected.

The 2026/27 rules establish that:

• The minimum number of off-the-job hours training apprentices must complete is an absolute minimum of 187 hours – the actual minimum may vary based on the apprenticeship.
• Employers must keep the PAYE information in their Government apprenticeship service account accurate and up to date.
• Individualised learning records and planned end dates must not change when submitted – this applies even if the apprenticeship agreement is extended.
• Off-the-job training and active learning do not include English and maths as standalone qualifications, even if the apprentice requires it to do their work.

At the end of the apprenticeship programme, the employer, provider and learner must agree that the training plan has been effectively delivered.

How do funding changes affect the apprenticeship levy?

For employers that pay the apprenticeship levy, the changes might be an added financial burden.

The Government no longer makes a supplementary payment of 10 per cent and this is no longer added to new funds entering apprenticeship levy accounts.

Where an employer does not pay the levy and the apprentice is older than 25, the employer co-investment rate is 5 per cent.

However, if the levy payer was to have insufficient funds in their apprenticeship service account, the employer co-investment rate is 25 per cent.

For employers who do not pay the levy, they will benefit from the Government funding all the apprenticeship training and assessment costs, up to the maximum amount.
This applies to apprentices aged between 16 and 24 at the start of their training.

The New £2,000 Cash Incentive

If you are a non-levy employer onboarding a new 16-to-24-year-old apprentice with a job start date on or after 1 October 2026, you may also qualify for a £2,000 cash hiring payment paid out in instalments after the learner passes their 90-day milestone.

Level 7 funding ban

It is also important to be aware of the level 7 funding ban that was rolled out from 1^st January 2026.  Level 7 funding is now strictly reserved for young learners aged 16 to 21 (with an extension up to age 24 only for care leavers or individuals with an EHCP). This ban applies uniformly across all sectors meaning any older staff member must now be funded entirely by the employer.

Speak to an accountant

Reaching out to an accountant can help you budget for the cost impact of the changes to apprenticeship funding, whether you pay or don’t pay the levy.

Accountants can integrate apprentice hiring into cash flow forecasting and recruitment planning, tracking start dates and ages so employers can access the funding and incentives available.

Reach out to our team for guidance on how the new apprenticeship funding rules might impact your business.

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