Apprenticeship Employer Co-Investment Guide for 2026/27
For employers planning apprenticeship recruitment or development in 2026/27, understanding apprenticeship employer co-investment is important when budgeting for training and assessment costs.
The apprenticeship funding rules changed for new apprenticeship starts from 1 August 2026, including significant changes to the level of employer contribution in some circumstances. The amount an employer may need to contribute depends on factors including whether the employer pays the apprenticeship levy, whether sufficient funds are available in its Apprenticeship Service account, the apprentice’s age and whether the total agreed training and assessment price exceeds the relevant funding band maximum.
This apprenticeship employer co-investment guide for 2026/27 explains the current rules in practical terms, including who pays, how the contribution is calculated and what employers should discuss with their training provider.
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Table of Content:
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What Is Apprenticeship Employer Co-Investment?
Employer co-investment is the contribution an employer makes towards the cost of apprenticeship training and assessment when government funding does not cover the full eligible cost.
The contribution is paid directly to the training provider. The employer and provider should agree the payment arrangements and schedule for the contribution.
For 2026/27, the rules are particularly important because the contribution can differ considerably depending on the employer’s circumstances.
For apprentices starting between 1 August 2026 and 31 July 2027, the current funding rules set different government contribution rates for:
Levy paying employers with sufficient funds
Levy paying employers with insufficient funds
Employers that do not pay the apprenticeship levy
Apprentices aged 16 to 24
Apprentices aged 25 or over
Training costs above the relevant funding band maximum
This means employers should not automatically assume that the previous 5% contribution rate will apply to every new apprenticeship.
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What Has Changed for Apprenticeship Co-Investment in 2026/27?
One of the most significant changes for 2026/27 concerns levy paying employers that do not have enough funds in their Apprenticeship Service account to cover the full cost of an apprenticeship.
For new apprenticeship starts from 1 August 2026, where a levy paying employer has insufficient funds and the apprentice is aged 25 or over at the start of their apprenticeship training, the government will fund 75% of the training and assessment costs up to the funding band maximum.
The employer is therefore responsible for the remaining 25%.
There is also an important change for employers that do not pay the apprenticeship levy.
For new starts from 1 August 2026:
Apprentices aged 16 to 24 can have their training and assessment costs fully funded by government, up to the funding band maximum.
Apprentices aged 25 or over attract a government contribution of 95%, meaning the employer contributes 5% up to the funding band maximum.
These rules apply to new starts from 1 August 2026. Employers should therefore consider the apprentice’s age and their own funding position when calculating the likely contribution.
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Apprenticeship Employer Co-Investment Rates for 2026/27
The following provides a simplified overview of the main 2026/27 arrangements.
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Employer and apprentice circumstances | Government contribution | Employer contribution |
Levy payer with sufficient Apprenticeship Service funds | Funding from available levy funds, up to the funding band maximum | No co-investment while sufficient funds are available |
Levy payer with insufficient funds, apprentice aged 16 to 24 | 100% up to the funding band maximum | 0% |
Levy payer with insufficient funds, apprentice aged 25 or over | 75% up to the funding band maximum | 25% |
Non levy employer, apprentice aged 16 to 24 | 100% up to the funding band maximum | 0% |
Non levy employer, apprentice aged 25 or over | 95% up to the funding band maximum | 5% |
Agreed training and assessment price above the funding band maximum | Government contribution is capped at the funding band maximum | Employer pays the additional amount |
The rates above relate to new apprenticeship starts from 1 August 2026 and should be considered alongside the full funding rules and the individual circumstances of the apprenticeship.
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How Does Co-Investment Work for Levy Paying Employers?
Levy paying employers use funds held in their Apprenticeship Service account to pay for eligible apprenticeship training and assessment.
Where sufficient funds are available, the employer can use those funds towards the agreed training and assessment price, subject to the funding rules and funding band maximum.
However, employers should not assume that levy funds will remain available for every future apprenticeship.
Where a levy payer has insufficient funds for a new apprenticeship start from 1 August 2026, the contribution rules depend on the apprentice’s age.
For an apprentice aged 16 to 24 at the start of training, government will fund the full training and assessment costs up to the funding band maximum.
For an apprentice aged 25 or over, the government contribution is 75%, leaving a 25% employer contribution up to the funding band maximum.
This makes it particularly important for levy paying employers to monitor their Apprenticeship Service account and consider future recruitment plans rather than looking only at the funding position for an individual apprentice.
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What If a Levy Employer Runs Out of Funds?
If an employer’s Apprenticeship Service account does not contain sufficient funds, the employer does not necessarily have to stop using apprenticeships.
Instead, the applicable co-investment arrangements may apply.
For apprentices aged 25 or over starting from 1 August 2026, the government contribution is 75% of the training and assessment costs up to the funding band maximum, with the employer responsible for the remaining 25%.
Employers should discuss the expected cost with their training provider before confirming the apprenticeship so that the financial arrangement is understood.
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How Does Co-Investment Work for Non Levy Employers?
Employers that do not pay the apprenticeship levy can still access government funding for eligible apprenticeship training.
For 2026/27, the rules are particularly relevant because the apprentice’s age affects whether an employer needs to make a contribution.
For new apprenticeship starts from 1 August 2026, where a non levy employer recruits an apprentice aged 16 to 24, government will fund the training and assessment costs up to the funding band maximum.
Where the apprentice is 25 or over, government will fund 95% up to the funding band maximum and the employer will contribute the remaining 5%.
This represents an important change from the position that many employers may be familiar with from previous funding years.
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Does a Non Levy Employer Always Pay 5%?
No.
This is one of the key points employers should understand when considering apprenticeship employer co-investment in 2026/27.
For a new apprenticeship starting from 1 August 2026, a non levy employer recruiting an apprentice aged 16 to 24 can have the training and assessment costs fully funded by government up to the funding band maximum.
The 5% employer contribution applies to a non levy employer where the apprentice is aged 25 or over at the start of their apprenticeship training.
The apprentice’s age at the start of training is therefore an important factor when establishing the applicable funding arrangement.
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What Is the Funding Band Maximum?
The funding band maximum is the maximum amount of government apprenticeship funding available towards the eligible training and assessment costs for a particular apprenticeship standard.
The agreed price between the employer and training provider can be up to the funding band maximum.
However, if the negotiated training and assessment price is higher than the applicable funding band maximum, the employer is responsible for the additional cost above that maximum.
This is separate from employer co-investment.
For example, an employer could have a required co-investment percentage while also being responsible for any agreed training and assessment costs above the funding band maximum.
Employers should therefore consider both the funding contribution and the total negotiated price when reviewing the financial implications of an apprenticeship.
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How Is Apprenticeship Co-Investment Paid?
Employer co-investment is paid directly to the training provider.
The employer and provider should agree how and when the contribution will be paid. This means the financial arrangement should be discussed as part of the apprenticeship setup rather than treated as an administrative detail after the programme has started.
Employers should clarify:
The agreed training and assessment price
The applicable funding band maximum
The government contribution
The employer contribution
Whether any costs sit above the funding band maximum
The payment schedule
How invoices or payment records will be managed
Who is responsible for monitoring the arrangement
Clear communication at the beginning of the apprenticeship can help prevent misunderstandings about the employer’s financial commitment.
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What Should Employers Check Before Starting an Apprenticeship?
Before agreeing to an apprenticeship, employers should review the funding position alongside the actual training requirement.
A useful checklist is:
Confirm whether your organisation pays the apprenticeship levy.
Check your Apprenticeship Service account balance, where applicable.
Confirm the apprentice’s age at the start of training.
Identify the funding band maximum for the apprenticeship standard.
Discuss the negotiated training and assessment price with the provider.
Establish whether an employer contribution applies.
Check whether any agreed price exceeds the funding band maximum.
Agree the payment schedule with the training provider.
Keep a record of the funding and payment arrangements.
Review the position if circumstances change before the apprenticeship starts.
These checks can give employers a clearer picture of the expected financial commitment before they confirm the apprenticeship.
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Why Is Co-Investment Important for Training Providers?
Although employer co-investment is paid by the employer, the arrangements also have practical implications for training providers.
Providers need to explain the applicable funding position clearly and ensure that employer arrangements are understood.
This is particularly relevant where providers work with a mixture of:
Levy paying employers
Non levy employers
Employers with insufficient levy funds
Apprentices of different ages
Apprenticeship standards with different funding band maximums
A provider’s processes should therefore support accurate identification of the applicable funding arrangement for each apprenticeship.
The funding rules also place requirements on providers around the recording and management of apprenticeship funding. A clear process can help staff understand which information needs to be checked before an apprenticeship starts and where supporting records should be maintained.
If funding arrangements are proving difficult to reconcile across your apprenticeship provision, an independent Funding Assurance Review can provide a useful opportunity to examine funding rules, learner records and supporting evidence.
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Funding Assurance Review
Skills Office Network can support providers with funding rule checks, learner file sampling, ILR and evidence reconciliation, identification of potential funding errors and corrective action recommendations.
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Common Apprenticeship Co-Investment Mistakes
Changes to funding arrangements can make it easy for employers to rely on information that applied to previous apprenticeship starts.
Some common areas to review include:
Assuming the contribution is always 5%
The 5% contribution is not the universal position for new apprenticeship starts in 2026/27.
For example, a levy payer with insufficient funds and an apprentice aged 25 or over can have a 25% employer contribution, while a non levy employer recruiting an apprentice aged 16 to 24 can have the training and assessment costs fully funded up to the funding band maximum.
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Looking only at the employer’s levy status
Levy status is important, but it is not the only factor.
For 2026/27, the apprentice’s age and whether a levy payer has sufficient funds can change the applicable government contribution.
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Forgetting about the funding band maximum
Government funding is subject to the relevant funding band maximum.
Where the agreed training and assessment price exceeds that maximum, the employer is responsible for the additional amount above the funding band maximum.
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Using older funding information
Apprenticeship funding rules can change between funding years.
Employers and providers should make sure they are using the rules applicable to the apprentice’s start date rather than relying on an older funding guide or a previous apprenticeship arrangement.
The 2026/27 funding rules apply to apprenticeships starting between 1 August 2026 and 31 July 2027.
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Apprenticeship Employer Co-Investment Checklist for 2026/27
Check | What to confirm |
Employer status | Is the employer a levy payer or non levy employer? |
Levy funds | If applicable, are sufficient funds available? |
Apprentice age | How old is the apprentice at the start of training? |
Start date | Does the apprenticeship start between 1 August 2026 and 31 July 2027? |
Funding band | What is the relevant funding band maximum? |
Agreed price | What training and assessment price has been agreed? |
Government contribution | What percentage will government contribute? |
Employer contribution | What percentage or additional amount will the employer pay? |
Payment schedule | How and when will the employer pay the provider? |
Records | Are the funding and payment arrangements documented? |
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How Can Employers Prepare for 2026/27 Apprenticeship Costs?
The most useful starting point is to assess each planned apprenticeship individually.
Rather than applying a standard contribution percentage across the organisation, employers should consider:
Who the apprentice is
When they will start training
Whether the organisation pays the levy
Whether sufficient levy funds are available
Which apprenticeship standard is being used
The relevant funding band maximum
The negotiated training and assessment price
Whether any costs sit outside government funding
For organisations planning multiple apprenticeship starts, it may also be useful to model likely costs across the recruitment pipeline.
This can help finance, HR and apprenticeship leads work from the same assumptions when planning recruitment and development activity.
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What Should Training Providers Explain to Employers?
Training providers have an important role in helping employers understand the funding arrangement attached to an apprenticeship.
Employer discussions should clearly establish the relevant contribution and explain what the employer is expected to pay.
A useful employer conversation should cover:
The apprenticeship standard being considered.
The apprentice’s expected start date.
The apprentice’s age at the start of training.
Whether the employer pays the levy.
Whether sufficient levy funds are available, where relevant.
The negotiated training and assessment price.
The relevant funding band maximum.
The government contribution.
Any employer contribution.
The agreed payment arrangements.
The aim is not simply to communicate a percentage. Employers should understand why that contribution applies to their particular apprenticeship.
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When Should Providers Review Their Co-Investment Processes?
Providers should consider reviewing their processes where the 2026/27 rules create uncertainty or where different funding arrangements are being managed across their apprenticeship provision.
This could include situations where:
Staff are still using 2025/26 contribution assumptions.
Employer funding arrangements are not consistently documented.
Levy balances are not being considered when discussing new starts.
Apprentice age is not being checked at the appropriate point.
Funding band maximums are not consistently considered.
Provider records and employer payment arrangements do not reconcile.
Staff are uncertain about the difference between co-investment and costs above the funding band maximum.
An internal review can help identify whether the funding rules are being translated into clear operational processes.
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When Funding Assurance Support Can Help
If your organisation is managing multiple apprenticeship funding arrangements, Skills Office Network can review the way funding rules are being applied across learner records, evidence and internal processes.
This can help identify potential weaknesses and agree practical actions based on your current provision rather than relying on a generic checklist.
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Frequently Asked Questions About Apprenticeship Employer Co-Investment
What is the employer co-investment rate for apprenticeships in 2026/27?
There is not one universal rate for all apprenticeship starts.
For new starts from 1 August 2026, the rate depends on circumstances. For example, a non levy employer recruiting an apprentice aged 25 or over contributes 5% up to the funding band maximum, while a levy payer with insufficient funds recruiting an apprentice aged 25 or over contributes 25% up to the funding band maximum.
Do employers pay 5% for all apprenticeships?
No. For new starts from 1 August 2026, a non levy employer does not make a contribution towards training and assessment costs for an apprentice aged 16 to 24, subject to the funding rules and funding band maximum.
A levy payer with insufficient funds also has a 0% contribution for an apprentice aged 16 to 24 under the 2026/27 rules.
What happens if a levy payer has insufficient funds?
For an apprentice aged 25 or over starting from 1 August 2026, government funds 75% of the training and assessment costs up to the funding band maximum, with the employer contributing 25%.
For an apprentice aged 16 to 24, government can fund 100% up to the funding band maximum.
Who pays the employer contribution?
The employer pays its contribution directly to the training provider. The employer and provider should agree the payment arrangements and schedule.
Does co-investment cover costs above the funding band maximum?
No. Where the negotiated training and assessment price exceeds the funding band maximum, the employer is responsible for the additional cost above the maximum. This is separate from the applicable co-investment contribution.
Do the 2026/27 rules apply to apprentices who started before August 2026?
The 2026/27 funding rules apply to apprenticeships starting between 1 August 2026 and 31 July 2027. Apprentices with earlier start dates are subject to the funding rules applicable to their start date.
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Final Apprenticeship Employer Co-Investment Checklist
Before confirming an apprenticeship start, employers and providers should be able to answer:
Is this a 2026/27 apprenticeship start?
Does the employer pay the apprenticeship levy?
If applicable, are there sufficient funds available?
How old is the apprentice at the start of training?
What is the relevant funding band maximum?
What price has been negotiated for training and assessment?
What will government contribute?
What will the employer contribute?
Are there any costs above the funding band maximum?
Has the payment schedule been agreed?
Are the arrangements clearly recorded?
The key point is that apprenticeship employer co-investment for 2026/27 depends on the circumstances of the individual apprenticeship. Employers should avoid relying on a single contribution percentage and instead assess the funding position using the rules that apply to the apprentice’s start date.
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Conclusion
The 2026/27 apprenticeship funding rules introduce important changes to employer contributions, particularly where levy paying employers have insufficient funds and where non levy employers recruit apprentices aged 25 or over.
For employers, the practical priority is to understand the likely cost before confirming an apprenticeship. For training providers, the focus should be on applying the correct funding rules consistently and explaining the financial arrangements clearly to employers.
With the right checks in place, employer co-investment can be incorporated into apprenticeship planning without becoming an unexpected financial or administrative issue.
If your organisation needs support reviewing apprenticeship funding arrangements, Skills Office Network can help assess funding processes, records and evidence and identify practical areas for improvement.
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Funding Assurance Review
Skills Office Network provides funding assurance support covering funding rule checks, learner file sampling, ILR and evidence reconciliation, potential funding errors and corrective action recommendations.
