Apprenticeship funding and employer incentives

Investing in skills, developing talent and supporting business growth

Apprenticeships offer employers a cost-effective way to recruit new talent, develop existing employees and build the skills needed for future success.

Government funding is available to support eligible employers with the cost of apprenticeship training and assessment, regardless of whether they pay the Apprenticeship Levy.

In addition to funding towards training costs, employers may also benefit from financial incentives, hiring payments and National Insurance savings when recruiting eligible apprentices.

The University of Buckingham Apprenticeship Team can help employers understand the funding arrangements and financial support available to their organisation.

Understanding apprenticeship funding

Apprenticeship funding is available to employers of all sizes, with the amount of Government support depending on several factors, including:

Whether the employer pays the Apprenticeship Levy.
The age of the apprentice when they start their programme.
The availability of funds within the employer’s Apprenticeship Service account.
The relevant Government Apprenticeship Funding Rules.

Government funding supports eligible apprenticeship training and assessment costs up to the maximum funding band for the relevant apprenticeship standard.

Where the agreed training and assessment price exceeds the funding band maximum, the employer is responsible for meeting the additional cost.

Apprentices are not required to contribute towards the eligible costs of their apprenticeship training and assessment.

Growth and Skills Apprenticeship Levy

The Apprenticeship Levy was introduced by the UK Government in April 2017 to encourage employers to invest in apprenticeship training and workforce development.

The Government’s Growth and Skills Levy reforms provide greater flexibility in how employers can invest in workforce development and address emerging skills needs.

Employers with an annual pay bill of more than £3 million generally pay the Apprenticeship Levy and are referred to as levy-paying employers.

The Levy is calculated at 0.5% of the employer’s annual pay bill, subject to the applicable annual levy allowance.

Employers that do not pay the Apprenticeship Levy are referred to as non-levy paying employers.

Funding for levy-paying employers

Levy-paying employers can use funds available within their Apprenticeship Service account to cover eligible apprenticeship training and assessment costs, up to the maximum funding band for the apprenticeship.

Where sufficient funds are available, these can be used to meet the eligible costs without an additional employer contribution.

Where an employer has insufficient funds in their Apprenticeship Service account, Government funding may be available towards the remaining costs:

Apprentices aged 16-24: The Government will fund 100% of eligible apprenticeship training and assessment costs, up to the funding band maximum, where the employer has insufficient levy funds.
Apprentices aged 25 and over: The Government will fund 75% of eligible apprenticeship training and assessment costs, up to the funding band maximum, with the employer contributing the remaining 25%.

Transferring unused levy funds

Levy-paying employers can transfer up to 25% of their annual levy funds to other eligible employers to support apprenticeship training.

This provides an opportunity for larger organisations to support workforce development within smaller businesses, supply chains and local communities.

Expiry of levy funds

Funds entering an employer’s Apprenticeship Service account are available for 12 months before expiring if unused.

Funds received before August 2026 remain subject to the previous 24-month expiry period.

Funding for non-levy paying employers

Employers that do not pay the Apprenticeship Levy can access Government funding towards eligible apprenticeship training and assessment costs.

Apprentices aged 16-24: The Government will fund 100% of eligible apprenticeship training and assessment costs, up to the funding band maximum.
Apprentices aged 25 and over: The Government will fund 95% of eligible apprenticeship training and assessment costs, up to the funding band maximum, with the employer contributing the remaining 5%.

Non-levy paying employers access funding through the Government’s Apprenticeship Service.

The University of Buckingham can support employers in understanding the funding available, confirming eligibility and navigating the relevant processes.

Employer incentives and additional financial support

In addition to Government funding towards apprenticeship training and assessment, employers may be eligible for further financial support when recruiting an apprentice.

The following incentives are subject to the relevant Government eligibility requirements.

£2,000 Apprenticeship Hiring Payment

Non-levy paying employers may be eligible for a hiring payment of up to £2,000 when recruiting a new apprentice aged 16-24.

To qualify:

The apprentice must meet the relevant age and funding eligibility requirements.
The apprenticeship must have a practical period start date on or after 1 October 2026.
The apprentice must not have been employed by the organisation for more than 90 days before the start of their apprenticeship training.
The employer and apprentice must meet the additional conditions set out in the Government Apprenticeship Funding Rules.

The payment is made in two instalments through the apprenticeship training provider, subject to the apprentice remaining in eligible employment at the relevant payment dates.

This payment is in addition to Government funding towards apprenticeship training and assessment costs.

£1,000 Additional Payment for Eligible Apprentices

Employers can receive an additional £1,000 payment when employing an apprentice who, at the start of their apprenticeship, is:

Aged 16-18.
Aged 19-24 and has an Education, Health and Care (EHC) plan.
Aged 19-24 and has previously been, or is currently, in the care of their local authority.

The payment is intended to help employers meet the additional costs associated with supporting eligible apprentices in the workplace.

It is paid in two instalments through the apprenticeship training provider, subject to the relevant eligibility requirements.

£3,000 Youth Jobs Grant

Employers may also be eligible for a £3,000 Youth Jobs Grant when recruiting an eligible young person aged 18-24 who has been unemployed and claiming Universal Credit for six months or more.

The Youth Jobs Grant is a separate Government employment initiative designed to encourage employers to create opportunities for young people.

Eligible vacancies must meet the scheme requirements, including:

Providing genuine, paid employment.
Offering at least 25 hours of work per week.
Being expected to last for at least four months.
Meeting the relevant National Minimum Wage or National Living Wage requirements.

Employers must register eligible vacancies through the Youth Jobs Grant scheme and recruit candidates through the specified process.

Where an eligible individual is recruited into an apprenticeship, the employer may also be able to access apprenticeship funding and additional incentive payments, subject to the eligibility requirements of each scheme.

National Insurance savings for apprentices under 25

Employers may also benefit from reduced National Insurance costs when employing an eligible apprentice under the age of 25.

Employers do not normally have to pay Class 1 employer National Insurance contributions on earnings up to the applicable threshold for eligible apprentices under 25.

This can provide a further financial benefit when recruiting younger apprentices.

Eligibility is subject to the relevant HM Revenue and Customs requirements.

Can employers access more than one incentive?

Depending on the circumstances of the employer and apprentice, it may be possible to benefit from more than one financial incentive.

For example, an eligible employer recruiting a young apprentice may qualify for:

Government funding towards apprenticeship training and assessment.
The £2,000 Apprenticeship Hiring Payment.
The £1,000 additional payment for eligible apprentices.
National Insurance savings for apprentices under 25.

Additional support, such as the Youth Jobs Grant, may also be available where the relevant scheme requirements are met.

Each payment has its own eligibility conditions, and employers should confirm their entitlement before making recruitment or funding decisions.

How can The University of Buckingham help?

Understanding apprenticeship funding and financial incentives can sometimes be complex, particularly when different funding arrangements apply.

The University of Buckingham Apprenticeship Team can support employers by:

Explaining the funding available for our apprenticeship programmes.
Helping employers understand their potential financial contributions.
Providing guidance on apprenticeship eligibility requirements.
Supporting employers with the Apprenticeship Service and relevant funding processes.
Explaining additional employer incentive payments that may be available.
Working with employers to identify suitable apprenticeship programmes for new and existing employees.

Whether you are considering recruiting your first apprentice or expanding an existing apprenticeship programme, we would be delighted to discuss how we can support your organisation.

Get in touch: complete our contact form.

Further information

Apprenticeship funding arrangements and employer incentives are determined by Government and are subject to change.

Eligibility for funding and financial support will depend on the individual circumstances of the employer and apprentice, together with the applicable Government funding rules.

For further information, please refer to the latest Government Apprenticeship Funding Rules or contact the University of Buckingham Apprenticeship Team.