Apprenticeship Funding and Levy Rules for Employers in England
Funding Guidance
Trusted by employers to deliver apprenticeships in AI, digital, data, IT and accountancy.
- Pay bill over £3 million: you pay the apprenticeship levy at 0.5% of your pay bill less a £15,000 allowance, and spend it on training through your apprenticeship service account.
- Pay bill under £3 million: apprentices aged 16 to 24 are fully funded for new starts from 1 August 2026. For apprentices aged 25 or over the government pays 95% of eligible training costs and you pay 5%.
- What funding covers: training and assessment only. It never covers wages, travel or equipment.
- From 1 August 2026: no 10% top up on new levy funds, new funds expire after 12 months instead of 24, and levy payers whose funds run out pay 25% co-investment on new starts for apprentices aged 25 or over.
- Next step: use the levy calculator to estimate your bill, or ask Solveway to check your funding route.
How much does an apprenticeship cost an employer?
Your total cost can include wages, any employer training contribution, paid time for off the job training, equipment and supervision. Levy funds and government co-investment cover eligible training and assessment, not wages, travel or equipment. What you contribute depends on your employer type, the learner's age and eligibility, the start date and the programme. For a typical funded hire, see our fully funded recruitment service and employer FAQs.
| Your situation | What you pay towards training and assessment |
|---|---|
| Levy payer with funds in your account | Nothing extra: the cost comes from your levy account, up to the funding band maximum for the standard. |
| Levy payer whose funds have run out | For new starts from 1 August 2026: nothing for apprentices aged 16 to 24, and 25% of the cost for apprentices aged 25 or over, with the government paying 75%. |
| Employer who does not pay the levy | For new starts from 1 August 2026: nothing for apprentices aged 16 to 24, and 5% of the cost for apprentices aged 25 or over, with the government paying 95%. |
| Training paid for by a levy transfer | Nothing while the transfer covers it. A levy payer can transfer up to 50% of its unused annual funds to other employers. |
Apprenticeship funding at a glance
Apprenticeship Funding Summary
Apprenticeship training in England is funded through the UK government's Apprenticeship Levy or via co-investment. Large employers with a pay bill over £3 million pay the levy (0.5% tax minus a £15,000 allowance) to fund training. Non-levy employers pay nothing towards training for apprentices aged 16 to 24 who start from 1 August 2026, and receive 95% government funding with a 5% contribution for apprentices aged 25 and over, unless a levy transfer covers the cost. Under the new Growth and Skills Levy reforms, the system gains additional flexibility, introducing modular apprenticeship units for existing staff, reducing minimum programme durations to 8 months, and restricting Level 7 funding to young apprentices starting January 2026.
On This Page
Which funding route applies to your organisation?
I pay the apprenticeship levy
For employers with an annual UK pay bill over £3 million.
- Estimate your levy contribution
- Plan for the 1 August 2026 account changes
- Use levy funds for apprenticeships and eligible apprenticeship units
I do not pay the apprenticeship levy
For smaller employers and SMEs with an annual UK pay bill below £3 million.
- Check government contribution routes
- Understand 95% funding, full funding and levy transfers
- Review under-25 support and upcoming incentives
Levy-Paying Employers
Businesses with a pay bill over £3M contribute 0.5% via monthly PAYE to fund training directly. The 10% government top-up stopped for new funds entering accounts from 1 August 2026.
Co-Investment Funding
Non-levy employers receive 95% government funding for apprentices aged 25 and over, contributing 5%. Apprentices aged 16 to 24 who start from 1 August 2026 are fully funded.
Fully Funded Training
Non-levy employers pay £0 for apprentices aged 16 to 24 who start from 1 August 2026. The same applies where a levy payer's funds have run out.
Cash Incentives
£1,000 for apprentices aged 16 to 18 (or 19 to 24 with an EHCP or care experience), up to £2,000 for non-levy employers recruiting 16 to 24-year-olds (from October 2026), and National Insurance savings for under-25s.
The Growth and Skills Levy
For the full story of the reform, read Growth and Skills Levy 2026: what changed for employers.
The Apprenticeship Levy is transitioning into the Growth and Skills Levy, a policy reform designed to give employers greater control and flexibility over training delivery. It introduces new pathways to solve skills gaps while retaining apprenticeships as the core foundation.
These flexibilities are intended to address immediate training needs. They allow levy funds to be used not only for full apprenticeships but also for short, flexible training courses known as apprenticeship units and support changes to programme structures to make training more accessible to existing staff.
Key Flexibilities Introduced
- Apprenticeship units: Flexible training blocks to upskill existing staff in critical areas.
- Minimum duration: Apprenticeships must last at least 8 months (reduced from 12 months in August 2025).
- Expanded Transfer Rules: Levy payers can transfer up to 50% of annual funds.
- Your levy bill: use the levy calculator to estimate what you pay in and can spend.
Apprenticeship Levy and Funding System Explained
Funding for levy-paying employers
How the Levy Operates
The Apprenticeship Levy is a 0.5% tax levied on employers with an annual pay bill exceeding £3 million. A £15,000 annual allowance is applied, which offsets the cost, ensuring only large employers pay the charge. Levy employers often use funds for programmes such as the Level 4 AI and Automation Practitioner apprenticeship or hiring an AI apprentice.
Levy contributions are collected monthly by HMRC via PAYE. The share for staff in England goes into your apprenticeship service account.
10% Government Top-Up
Until 31 July 2026 the government added a 10% top-up to funds entering accounts monthly. It no longer applies to new funds entering accounts from 1 August 2026.
Levy Expiry Rules
Funds entering your account on/before 31 July 2026 expire after 24 months. New funds entering accounts from 1 August 2026 expire after 12 months if unused.
Levy Rules Summary
- Annual payroll threshold: > £3,000,000
- Levy rate: 0.5% of pay bill, less a £15,000 allowance
- Allowance: £15,000 tax offset per year
- Levy Transfers: Transfer up to 50% of annual funds to supply chain or SMEs
Managing your apprenticeship service account
The apprenticeship service is the primary digital gateway to access and manage your funds. Solveway helps guide employers through account creation, PAYE scheme linkages, and cohort approvals.
Setup Checklist:
- Create your apprenticeship service account. You'll need a GOV.UK One Login linked to your work email (you can create it at the same time), plus your Government Gateway login or PAYE and accounts office reference numbers.
- Link your organisation details and PAYE scheme.
- Confirm signing the employer agreement.
- Grant permissions to training providers to manage cohorts.
Levy Payer Changes: What's Changing in 2026?
Funding for SMEs and non-levy employers
Hiring for the first time? Start with our guide to how to hire an apprentice. Not sure who can be an apprentice? Read our guide: Is there an age limit for UK apprenticeships?
1. Current Funding & Co-Investment
For apprentices aged 25 and over, non-levy employers receive 95% government funding for eligible apprenticeship training and contribute a 5% co-investment, unless a levy transfer applies. Apprentices aged 16 to 24 who start from 1 August 2026 are fully funded.
Fully Funded Exemptions:
Government pays 100% (£0 cost) for apprentices aged 16 to 24 who start from 1 August 2026 with a non-levy employer, or with a levy payer whose funds have run out.
2. Full Funding for 16 to 24 Year Olds
From 1 August 2026, the government fully funds apprenticeship training for apprentices aged 16 to 24 at non-levy paying businesses, and where a levy payer's funds have run out.
Growth & Skills Levy Support:
This eliminates the standard 5% co-investment cost entirely for apprentices within this age bracket, reducing the employer contribution to £0.
3. October 2026 Recruitment Payment
From 1 October 2026, eligible non-levy employers will receive a recruiting payment of up to £2,000 when hiring new apprentices aged 16 to 24.
Key Criteria:
The apprentice must have joined the business within the previous 3 months. Paid to the employer through the training provider in two halves (the first after 90 days); the provider must pass the payment on in full within 30 working days.
SME Co-investment Protection
For apprentices aged 25 and over, the co-investment rate for non-levy employers and SMEs remains at 5%. The 25% rate applies solely to levy-paying employers whose levy funds are exhausted, for apprentices aged 25 and over. Apprentices aged 16 to 24 are fully funded in both cases.
Funding & Residency Conditions
Funding rules depend on whether you pay the levy, the apprentice's age at the start, learner eligibility, start date, programme and funding route. Full funding is subject to learner age and the government's residency rules. The £2,000 recruiting payment starting October 2026 is subject to published government conditions and is not guaranteed for all hires. Solveway confirms eligibility during onboarding.
Non-Levy Apprenticeship Funding Explained for SMEs
Apprenticeship unit funding rules
Apprenticeship units are short, flexible training courses for existing staff aged 19 and over, lasting 30 to 140 delivery hours over 1 to 16 weeks in approved critical skills areas. The conditions below set out who qualifies and how the training is funded. Explore Solveway's AI apprenticeship route alongside the dedicated AI Leadership apprenticeship units page.
Under the Growth and Skills Levy, the government has introduced short, flexible training courses known as apprenticeship units. These units are designed to upskill existing staff in critical areas without requiring a commitment to a full, multi-year apprenticeship programme.
Solveway is approved to deliver apprenticeship units and can support employers to use this shorter, flexible training route to develop AI, digital and workforce skills.
A levy payer pays for a unit from its apprenticeship service account at the published funding rate. If you do not pay the levy, the government funds the unit in full. If you pay the levy but your account has run short, the government funds all the costs for learners aged 19 to 24 and 75% for learners aged 25 or over, with your business paying the balance.
First Critical Skills Areas
Apprenticeship units target specific, high-value technical capabilities. The initial launch includes training pathways in:
Apprenticeship Unit Funding Conditions
Aged 19 and over
Learners must have reached 19 years of age at the start of their training.
Already Employed
Restricted to existing staff; not available to unemployed learners.
30 to 140 hours
Course duration must consist of 30 to 140 total delivery hours.
1 to 16 weeks
Training must be delivered over a period of 1 to 16 weeks total.
Critical Skills
Limited to short, flexible courses in high-value technical sectors.
Employer incentives and additional support
Employers are eligible for cash incentive payments and payroll tax reliefs when recruiting and upskilling apprentices. Ensure you plan for these available benefits:
Age 16–18 Incentive
All employers (both levy and non-levy) receive £1,000 for each apprentice hired aged 16–18, or 19–24 with care experience or an EHCP.
Paid in two halves, after 90 days and after 365 days (or after 242 days for apprenticeships shorter than 12 months and for foundation apprenticeships).
SME Recruiting Payment
From 1 October 2026, non-levy employers will receive up to £2,000 for recruiting new apprentices aged 16 to 24. Paid through the training provider, who must pass it on within 30 working days.
Must join within past 3 months. Paid after 90 days and 365 days (or 242 days for shorter programmes).
Level 2 Support
Specific funding allocations and support pathways are available for L2 foundation apprenticeships in construction, digital, health, and catering.
Supports early career progression.
National Insurance Savings
Employers are exempt from paying Employer National Insurance contributions for apprentices aged under 25 earning below £50,270.
Reduces overall employment overheads.
Key funding changes employers need to plan for
Compare the rules that applied before 1 August 2026 with the rules that apply now. Use this roadmap to align your budgets:
| Funding Area | Before 1 August 2026 | From 1 August 2026 | Employer Action |
|---|---|---|---|
| 10% Top-Up | A 10% government top-up was added monthly to funds entering apprenticeship service accounts. | The 10% government top-up stopped for new funds entering apprenticeship service accounts from 1 August 2026. | Plan apprenticeship budgets assuming no top-up for funds entering from August 2026. |
| Levy Expiry | Unused funds expired after 24 months. | New funds entering accounts expire after 12 months if unused. Funds that entered on or before 31 July 2026 continue to expire after 24 months. | Monitor account balance and plan training schedules to utilise new funds within 12 months. |
| Co-Investment (When Levy Runs Out) | Employers paid 5% co-investment once levy funds ran out; the government paid 95%. | If levy funds run out, new starts are fully funded for apprentices aged 16 to 24; for apprentices aged 25 or over you pay 25% and the government pays 75%. | Budget for 25% co-investment on new starts aged 25+ if your levy pot runs short. |
| Apprenticeship Units | Before April 2026: only full apprenticeships could be funded. Shorter modules were not eligible. | Apprenticeship units are fundable: short courses for people aged 19 and over who are already employed, lasting 30 to 140 delivery hours over 1 to 16 weeks. Non-levy employers are fully funded. | Audit workforce skill gaps and prepare unit training plans. |
| SME/Non-Levy Under-25 Support | Full funding applied to ages 16 to 21 (or up to 24 with an EHCP or care experience). An under-50-employees waiver previously applied to some starts. | Apprentices aged 16 to 24 are fully funded for non-levy employers (and for levy payers whose funds have run out), regardless of company size. From October 2026, eligible non-levy employers may receive up to £2,000 when recruiting new apprentices aged 16 to 24, subject to the published conditions. | Plan hiring of young apprentices to take advantage of £0 training costs and recruitment incentives. |
| Level 7 Restrictions | Before 1 January 2026: Level 7 (Master's level) programmes were eligible for funding regardless of learner age. | Level 7 apprenticeships are only funded for apprentices aged 16 to 21 when they start, or 22 to 24 with an EHCP or care experience. Existing learners who started before 1 January 2026 continue to be funded to completion. | Review existing Level 7 starts (which remain funded) and adapt talent development routes for staff aged 22+. |
| Minimum Duration | Apprenticeship programmes had to last a minimum of 12 months. | Every apprenticeship's practical period must last at least 8 months (reduced from 12 months in August 2025). Most Solveway programmes run for 9 to 15 months, depending on the level. | Ask Solveway which programme length fits your role and prior learning. |
How Solveway helps employers manage funding
Managing government systems, allocations, and compliance can be challenging. Solveway operates as your full-service educational partner, handling:
- Onboarding & Eligibility Audits (Verify levy status and cohort alignment)
- Apprenticeship service setup & PAYE linking (ensure setup is error-free)
- Levy Transfers & Modular Planning (Facilitate transfers and unit curriculum)
Our specialised routes are fully mapped against active standards: see our IT apprenticeships for employers, our data and AI apprenticeships, and our accountancy and finance apprenticeships (including the Assistant Accountant and Professional Accounting Technician programmes). They help you maximise the business case (reducing recruitment overheads, improving workforce productivity, and driving internal staff retention). For IT infrastructure roles see the Information Communications Technician standard, and for analysts the Data Analyst apprenticeship.
92% Staff Retention
Investing in structured apprenticeships results in higher employee loyalty, helping you retain technical talent and protect intellectual capital.
Lower Recruitment Overheads
Train existing employees or recruit apprentices directly rather than paying expensive agency commissions for senior external hires.
Funding FAQs
Can I use levy funds for existing employees?
What happens if I run out of levy funds?
What are the co-investment rules for SMEs and non-levy employers?
What new support is available for SMEs recruiting young apprentices?
Do levy funds still get the 10% government top-up?
Are Level 7 (Master's) apprenticeships still funded?
Do funds expire?
Can I use funds to pay apprentice wages?
What is the off-the-job training requirement?
Latest funding review and official sources
Our team monitors government regulatory portals to ensure our curriculum and funding guides are completely aligned with primary guidelines.
Primary Monitored Source: DfE Growth and Skills Levy Page
Last reviewed: September 14, 2026
Important: funding depends on start date and eligibility
Funding rules depend on employer type, learner eligibility, start date, programme and funding route. Solveway confirms eligibility during onboarding.
Ready to Maximise Your Funding?
Whether you pay the levy or are an SME seeking 95% to 100% co-investment support, our team can help you build an optimised training programme. Contact the employer team or book a call below.