Apprenticeship Funding Changes in 2026: Key Dates, Costs and Actions for Employers

The apprenticeship landscape is undergoing one of its biggest shifts since the levy was introduced in 2017. These changes are designed to strengthen pathways into employment for younger individuals while giving employers greater flexibility in how they invest in skills.

For organisations responsible for workforce development and recruitment, understanding what is changing and when is essential. This guide outlines the key updates and how to respond effectively.

What’s changing in 2026?

The government is reshaping apprenticeship funding to create a more flexible, skills-focused system.          

For levy-paying employers:

• The Apprenticeship Levy will become the Growth and Skills Levy
• Levy funds will expire after 12 months instead of 24
• The 10% government top-up will be removed
• Employer contributions will increase to 25% once levy funds are exhausted (from 1 August 2026)
• New routes such as Foundation Apprenticeships will expand
• Employers will be able to fund short, modular training units

For non-levy employers:

• Increased incentives for recruiting younger apprentices
• Continued access to Foundation Apprenticeships and modular training
• High levels of government funding remain in place

These reforms are designed to address skills shortages while encouraging more targeted and flexible training investment.

Common employer questions about the 2026 changes

What is the Growth and Skills Levy?

From April 2026, the current levy system evolves to offer greater flexibility.

• 16 apprenticeship standards will be withdrawn or defunded
• Employers can use levy funds for shorter, modular training
• Foundation Apprenticeships will expand into more sectors
• Up to 50% of levy funds can be allocated to training units

What this means:
This change allows employers to develop skills in stages, aligning training more closely to immediate business needs rather than committing only to full programmes.

How are apprenticeship costs changing?

From 1 August 2026:

• The 10% top-up will be removed
• Levy funds will expire after 12 months
• Co-investment will rise to 25% once levy funds are used

What this means:
Financial planning becomes more important. Employers will need to manage levy usage more actively and prepare for higher costs if training extends beyond available funds.

What support is available for non-levy employers?

• Around 95% of training costs are typically funded
• 100% funding is available for apprentices aged under 25

What this means:
Apprenticeships continue to offer a highly cost-effective approach to recruitment and development, particularly for organisations focused on attracting new talent.

Are there incentives for hiring younger apprentices?

Yes, government policy is increasingly focused on supporting younger people into work.

• Additional incentives are available for employing those under 25
• The aim is to reduce the number of individuals not in education, employment or training

What this means:
Employers can strengthen early talent pipelines while also benefiting from targeted financial support.

What are Foundation Apprenticeships?

Foundation Apprenticeships are an entry-level route designed to widen access to employment and training.

• Expanding into sectors such as retail, hospitality and administration
• Complement existing areas like construction, digital and health

What this means:
These programmes offer a practical way to build future talent, particularly for individuals with limited experience entering the workforce.

Are higher-level apprenticeships affected?

There are some restrictions:

• Level 7 funding may be limited to younger learners
• Some higher-level programmes will be withdrawn from August 2026

What this means:
Organisations may need to review how they approach leadership and management development, particularly when planning progression for existing employees.

Are apprenticeship standards changing?

Yes.

• Some standards will be withdrawn or defunded

• Training providers are developing more sector-specific alternatives

What this means:
It is important to review current and planned programmes to ensure they remain available, relevant and aligned to your organisation’s needs.

What should employers do now?

Organisations that act early will be in a stronger position to benefit from these changes.

1. Review your levy strategy

• Forecast usage against the 12-month expiry window
• Reduce the risk of unused funds

2. Explore modular training options

• Identify areas where short courses can deliver quick impact
• Combine shorter learning with longer-term development

3. Reassess your talent pipeline

• Consider Foundation Apprenticeships for entry-level roles
• Increase focus on younger recruits

4. Plan for increased costs

• Model scenarios where levy funds are fully utilised
• Prepare for higher co-investment rates

5. Check programme availability

• Confirm which standards remain funded
• Identify suitable alternatives where needed

Final thoughts

The 2026 apprenticeship reforms signal a shift towards greater flexibility and accountability in skills development.

For employers, this is an opportunity to:

• Take a more targeted approach to workforce development
• Use funding more effectively
• Build a stronger pipeline of future talent

Those who adapt early will be better placed to close skills gaps, improve productivity and develop teams that are ready for future challenges.

Need support with your apprenticeship strategy?

If you are reviewing your approach to apprenticeships or want to understand how these changes will affect your organisation, now is the right time to act.

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