Apprenticeship Levy Changes 2026: Employer and Provider Guide
Updated: Aug 21
The apprenticeship levy changes introduced throughout 2026 have significantly altered how employers and training providers fund, plan and manage apprenticeship delivery in England.
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Confirmed changes include new restrictions on Level 7 apprenticeship funding, the introduction of apprenticeship units, shorter levy fund expiry periods, removal of the government top-up and revised co-investment arrangements.
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Additional support has also been introduced to encourage employers to recruit younger apprentices, including fully funded training for eligible 16–24-year-olds and a new hiring payment for qualifying non-levy employers.
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For training providers, these changes create both opportunities and compliance risks. Funding eligibility, employer contributions, learner age, start dates and the type of training being delivered must all be recorded and evidenced correctly.
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Skills Office Network supports apprenticeship providers to interpret funding changes, strengthen evidence and ILR accuracy, and prepare for DfE funding assurance activity.
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Table of Content:
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What Are the Apprenticeship Levy Changes in 2026?
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The main apprenticeship levy changes taking effect in 2026 include:
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Level 7 funding restrictions from 1 January 2026
The launch of apprenticeship units from 28 April 2026
Fully funded apprenticeship training for eligible apprentices aged 16–24 from 1 August 2026
Levy funds expiring after 12 months instead of 24 months
Removal of the automatic 10% government top-up
A higher co-investment contribution for levy-paying employers with insufficient funds
Changes to the relationship between co-investment and completion payments
A hiring payment of up to £2,000 for eligible non-levy employers from 1 October 2026
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Some changes affect all employers, while others depend on whether the employer pays the apprenticeship levy, has sufficient funds or is recruiting an apprentice within a particular age group.
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Providers must therefore avoid applying one funding approach to every apprentice or employer.
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For an explanation of how the underlying levy system works, including who pays it and how it is calculated, read our complete guide to the Apprenticeship Levy.
Apprenticeship Levy Changes Timeline
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The following timeline summarises the main implementation dates.
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1 January 2026
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Government funding for Level 7 apprenticeships became restricted by age.
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New Level 7 starts remain eligible for government funding where the apprentice is:
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Aged 16–21 at the start of the apprenticeship
Aged 22–24 and has an Education, Health and Care plan
Aged 22–24 and is, or has previously been, in local authority care
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Apprentices who started an eligible Level 7 apprenticeship before 1 January 2026 continue to receive funding through to completion under the transitional arrangements.
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28 April 2026
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The first apprenticeship units became available.
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These shorter programmes allow employed learners to complete targeted training based on content drawn from existing apprenticeship occupational standards.
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1 August 2026
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Several major funding changes took effect:
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Levy funds started expiring after 12 months instead of 24 months
The automatic 10% government top-up was removed
New co-investment arrangements were introduced
Eligible apprentices aged 16–24 could receive fully funded training
The connection between collecting employer co-investment and releasing the completion payment was removed for eligible completions
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1 October 2026
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Eligible employers that do not pay the apprenticeship levy can receive a hiring payment of up to £2,000 when recruiting a new apprentice aged 16–24.
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The apprentice must meet the relevant eligibility and employment-date requirements set out in the funding rules.
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Level 7 Apprenticeship Funding Changes
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One of the earliest apprenticeship levy changes in 2026 affected government funding for Level 7 apprenticeships.
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From 1 January 2026, Level 7 apprenticeships are generally government-funded only where the apprentice is aged 16–21 at the start of the programme.
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Funding remains available for apprentices aged 22–24 where they:
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Have an Education, Health and Care plan
Are, or have previously been, in local authority care
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The apprentice’s age and circumstances at the start of the apprenticeship determine eligibility.
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The changes do not remove the Level 7 apprenticeship itself. Employers may continue to purchase Level 7 apprenticeship training commercially for employees who are outside the government-funded age criteria.
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Transitional Protection for Existing Apprentices
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An apprentice who started a Level 7 apprenticeship before 1 January 2026 can continue to be funded through to completion, provided the original start was eligible.
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Providers should maintain clear evidence of:
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The apprenticeship start date
The apprentice’s age at the start
Any applicable EHC plan or care status
The agreed training arrangements
Eligibility under the rules applying at the time of the start
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Applying the new age restriction retrospectively to an eligible pre-2026 start would be incorrect.
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What Level 7 Providers Need to Review
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Providers delivering Level 7 standards should review:
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Recruitment and eligibility checks
Employer communications
Application and onboarding processes
Commercial pricing options
Programme financial forecasts
Evidence supporting protected existing starts
ILR records and apprenticeship service information
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Providers should not assume that an employee’s seniority, previous qualifications or employer levy balance automatically makes the learner eligible for government funding.
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Apprenticeship Units Under the Growth and Skills Levy
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Apprenticeship units launched on 28 April 2026 as a new form of shorter, skills-focused training.
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Units are drawn from existing apprenticeship occupational standards and are designed to help employers develop specific workforce capabilities without enrolling an employee on a complete apprenticeship programme.
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The initial units cover selected priority skills areas and normally involve between 30 and 140 planned delivery hours.
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They are primarily intended for employed learners aged 19 or over who need targeted upskilling. They are not designed as a direct replacement for full apprenticeships or as general entry-level training for people seeking to begin a new career.
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How Apprenticeship Unit Funding Works
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Apprenticeship unit funding uses a milestone payment model.
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Providers receive:
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30% of the agreed eligible price after the learner has successfully onboarded and completed 30% of the planned delivery hours
The remaining 70% after the learner completes 100% of the planned delivery hours and achieves the required successful outcome
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This creates a different financial risk profile from traditional monthly apprenticeship payments.
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Where a learner starts but does not complete the required training and outcome, the provider may not receive the final 70% payment.
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Providers must therefore carefully manage:
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Learner eligibility
Employer agreements
Planned delivery hours
Attendance and participation
Evidence of learning
Skills test arrangements
Completion confirmation
ILR records
Withdrawal and change-of-circumstance processes
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Our existing Insight article provides a detailed breakdown of apprenticeship unit funding and what it means for providers.
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Levy Funds Now Expire After 12 Months
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From 1 August 2026, funds entering an employer’s apprenticeship service account expire after 12 months if they are not used.
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Previously, levy funds remained available for 24 months.
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The shorter expiry period means employers have less time to convert levy contributions into apprenticeship training.
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Funds are generally used on a first-in, first-out basis, so the oldest available funds are used first. Amounts that are not used within the relevant period expire and are no longer available to the employer.
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What the Shorter Expiry Period Means for Employers
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Levy-paying employers should review their apprenticeship service account more frequently and connect apprenticeship planning with workforce development.
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Useful actions include:
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Monitoring levy balances and expiry forecasts
Identifying workforce skills gaps earlier
Planning recruitment and internal development
Selecting appropriate apprenticeship standards
Engaging training providers before funds approach expiry
Reviewing whether levy transfers are appropriate
Considering eligible apprenticeship units where relevant
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Employers should not recruit apprentices solely to use an expiring balance. Each programme must still represent a genuine job, appropriate training need and valid apprenticeship.
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What the Shorter Expiry Period Means for Providers
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Training providers may receive more employer enquiries about expiring funds, but they must avoid allowing urgency to weaken eligibility or onboarding checks.
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A start date entered into the apprenticeship service or ILR must reflect the actual commencement of eligible apprenticeship training.
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Providers should not:
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Record an artificial start date to secure funding
Enrol an unsuitable employee solely to use an employer’s balance
Begin delivery before the required agreements are in place
Assume an employer’s available balance confirms learner eligibility
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Funding evidence must demonstrate that the apprentice and employer met the relevant requirements at the actual start of the programme.
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Removal of the 10% Government Top-Up
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Before August 2026, the government automatically added a 10% top-up to levy funds entering an employer’s apprenticeship service account.
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From 1 August 2026, this automatic top-up was removed.
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For example, an employer contribution that previously generated £11,000 of available digital account funds after the top-up would now provide £10,000.
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The removal reduces the amount available to some levy-paying employers and may cause their account balance to be exhausted sooner.
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Employers should update financial forecasts rather than relying on funding levels based on the previous top-up arrangement.
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Training providers should also ensure that employer proposals, programme forecasts and payment assumptions reflect the employer’s actual available balance.
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New Co-Investment Rules from August 2026
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Co-investment applies when an employer does not have sufficient levy funds or does not pay the levy and the apprenticeship is not eligible for full government funding.
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The applicable contribution now depends on:
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Whether the employer pays the levy
Whether sufficient levy funds are available
The apprentice’s age at the start
Whether the apprentice meets an applicable exception
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Employers That Do Not Pay the Levy
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For apprenticeship starts from 1 August 2026:
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The government funds 100% of eligible training and assessment costs for apprentices aged 16–24
For apprentices aged 25 or over, the government normally contributes 95% and the employer contributes 5%
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Funding is available up to the apprenticeship funding band maximum.
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Levy-Paying Employers With Insufficient Funds
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Where a levy-paying employer has exhausted its available funds:
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The government funds 100% of eligible costs for apprentices aged 16–24
For apprentices aged 25 or over, the government contributes 75% and the employer contributes 25%
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This 25% employer contribution is considerably higher than the previous general 5% co-investment rate.
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Providers working with levy-paying employers should therefore identify when an account is likely to run out of funds and explain the potential employer contribution before delivery begins.
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Why Providers Must Identify Employer Status Correctly
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Funding risk can arise where:
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Employer levy status is incorrect
The employer has insufficient funds
The learner’s age is recorded incorrectly
The wrong co-investment percentage is applied
Employer contributions are not agreed clearly
ILR and apprenticeship service information do not match
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Providers should confirm funding arrangements with the employer and retain evidence of the agreed price and any required contribution.
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Fully Funded Apprenticeship Training for Young People
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From 1 August 2026, eligible apprenticeship starts for young people aged 16–24 can receive fully funded training and assessment up to the funding band maximum.
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This applies to:
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Employers that do not pay the apprenticeship levy
Levy-paying employers that have exhausted their available levy funds
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The apprentice’s age is assessed at the start of apprenticeship training.
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The arrangements can also include an apprentice aged 15 where their 16th birthday falls between the last Friday of June and 31 August, subject to the funding rules.
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The policy is designed to support more young people into apprenticeships and reduce the direct training cost for employers.
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However, fully funded training does not remove the provider’s responsibility to verify:
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Learner eligibility
Employment status
The apprenticeship start date
Prior learning
Programme suitability
The negotiated price
Employer and learner agreements
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A zero employer contribution does not mean a reduced evidence requirement.
Apprenticeship Hiring Payment from October 2026
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From 1 October 2026, eligible employers that do not pay the apprenticeship levy can receive a hiring payment of up to £2,000 when recruiting a new apprentice aged 16–24.
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The payment is intended to encourage smaller employers to create new apprenticeship opportunities for younger people.
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Eligibility depends on the apprentice’s age, employment date, apprenticeship start date and the employer meeting the relevant funding conditions.
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This payment is separate from the funding used to pay for apprenticeship training and assessment.
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It may also be available alongside other forms of employer support, including:
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Fully funded training for eligible young apprentices
Existing £1,000 support payments for eligible apprentices
Employer National Insurance relief for qualifying apprentices under 25
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Providers should explain the support available without promising payment before the employer’s eligibility has been confirmed.
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For more information, read our complete Apprenticeship Incentive Grant 2026 guide.
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Changes to Completion Payments and Co-Investment
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For apprenticeships completing on or after 1 August 2026, the direct link between collecting the employer co-investment contribution and releasing the completion payment has been removed.
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This means a missing employer contribution does not automatically prevent the provider’s completion payment from being released in the same way as under the previous arrangement.
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However, this does not remove the employer’s contractual obligation to pay the contribution.
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Providers should continue to:
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Agree the employer contribution
Issue appropriate invoices
Maintain evidence of collection activity
Reconcile expected and received payments
Follow contractual debt-management procedures
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The policy change should not be interpreted as permission to waive a required employer contribution without considering the funding and contractual implications.
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What the Apprenticeship Levy Changes Mean for Providers
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The 2026 changes increase the importance of accurate eligibility assessment and funding decisions.
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Providers may now be managing:
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Protected Level 7 starts from before January 2026
New Level 7 starts subject to age restrictions
Full apprenticeship programmes
Apprenticeship units
Levy-funded apprentices
Non-levy reservations
Levy employers with exhausted accounts
Different co-investment rates based on age and employer status
Fully funded young apprentices
Employer hiring payments
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Using the wrong funding treatment could result in incorrect claims, employer disputes or recovery of funding.
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Review Onboarding Processes
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Application and onboarding processes should capture:
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The learner’s age at the correct date
Employer levy status
Available levy funding
Prior learning and experience
Programme eligibility
The agreed price
The applicable employer contribution
Any EHC plan or care status relevant to funding eligibility
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Staff should understand why each item is collected and how it affects funding.
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Update Employer Communications
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Employers may have heard simplified messages about “free apprenticeships” or a more flexible levy.
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Providers should explain:
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Which costs are eligible
When full government funding applies
When co-investment is required
How the funding band maximum operates
What happens when levy funds are exhausted
Which payments go to employers rather than providers
Which evidence the employer must supply
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Marketing messages should not create expectations that are inconsistent with the funding rules.
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Strengthen ILR and Data Controls
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The ILR must accurately reflect the learner, programme, employer and funding arrangement.
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Providers should check for inconsistencies between:
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The ILR
The apprenticeship service
Employer contracts
Training plans
Learner evidence
Financial records
Delivery systems
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Skills Office Network’s ILR and Data Support helps providers identify errors, strengthen data controls and prepare accurate funding returns.
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Review Financial Forecasting
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The removal of the 10% top-up, shorter fund expiry and revised co-investment rates can affect employer demand and provider income.
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Financial forecasts should distinguish between:
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Levy-funded delivery
Government-funded delivery
Employer co-investment
Commercial contributions above the funding band
Apprenticeship unit milestone payments
Payments passed to eligible employers or learners
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Providers should avoid forecasting income based only on planned starts without considering retention, completion and milestone conditions.
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Common Compliance Risks
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Common risks arising from the apprenticeship levy changes include:
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Applying outdated Level 7 age rules
Using a 24-month levy expiry assumption after August 2026
Including the removed 10% top-up in forecasts
Applying 5% co-investment to every employer
Failing to distinguish non-levy employers from levy employers with exhausted funds
Treating apprenticeship units as full apprenticeships
Recording incorrect delivery hours for apprenticeship units
Weak evidence supporting learner age or care status
Inconsistencies between the ILR and apprenticeship service
Promising employers incentive payments without confirming eligibility
Failing to agree employer contributions before delivery
Using marketing claims that oversimplify funding eligibility
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Providers should review samples across different learner ages, employer types and programme categories rather than testing only one standard funding scenario.
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How Skills Office Network Can Support
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Skills Office Network helps apprenticeship providers manage the operational and compliance implications of the 2026 funding changes.
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Our support can include:
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Funding eligibility reviews
DfE funding assurance reviews
Learner evidence sampling
ILR and apprenticeship service reconciliation
Employer contribution checks
Apprenticeship unit readiness reviews
Level 7 transitional funding checks
Policy and process reviews
Staff training and compliance guidance
Improvement action planning
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Our Funding Assurance Review can help identify errors before they result in funding recovery or employer disputes.
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Providers requiring support across funding, data, governance and quality can also access our 360 Degree Support.
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Frequently Asked Questions
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What changed about the Apprenticeship Levy in 2026?
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The main changes include Level 7 funding restrictions, apprenticeship units, 12-month levy fund expiry, removal of the 10% top-up, revised co-investment rates, fully funded training for eligible 16–24-year-olds and a new hiring payment for qualifying non-levy employers.
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When did the levy fund expiry period change?
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From 1 August 2026, levy funds began expiring after 12 months rather than 24 months.
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Has the 10% apprenticeship levy top-up been removed?
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Yes. The automatic 10% government top-up was removed from 1 August 2026.
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What is the co-investment rate in 2026?
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For starts from 1 August 2026, non-levy employers normally contribute 5% for apprentices aged 25 or over. Levy-paying employers with insufficient funds normally contribute 25% for apprentices aged 25 or over. Eligible apprentices aged 16–24 can receive fully funded training.
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Are apprenticeships fully funded for people under 25?
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Eligible apprenticeship starts for people aged 16–24 can receive full government funding where the employer does not pay the levy or is a levy payer with insufficient available funds. Other eligibility and evidence requirements continue to apply.
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Can adults still start a Level 7 apprenticeship?
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Yes, but new starts outside the government-funded age criteria will normally need to be paid for commercially by the employer or learner, subject to the applicable rules. Existing eligible apprentices who started before 1 January 2026 remain funded through to completion.
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What are apprenticeship units?
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Apprenticeship units are shorter programmes based on content from apprenticeship occupational standards. They allow employed adults to complete targeted skills training without undertaking an entire apprenticeship.
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Can apprenticeship units be paid for using levy funds?
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Yes. Levy-paying employers can use available levy funds for eligible apprenticeship units. Non-levy employers can access government funding subject to the apprenticeship unit funding rules.
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What is the £2,000 apprenticeship hiring payment?
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From 1 October 2026, eligible non-levy employers can receive up to £2,000 when recruiting a new apprentice aged 16–24, subject to the relevant eligibility conditions.
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Prepare for the Apprenticeship Levy Changes
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The apprenticeship levy changes introduced in 2026 create a more complex funding environment for employers and training providers.
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New opportunities are available through apprenticeship units, fully funded training for younger apprentices and employer hiring support. However, these sit alongside shorter levy expiry periods, revised co-investment rates and tighter Level 7 eligibility.
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Providers should update their processes, staff guidance, employer communications and financial controls to reflect the latest rules.
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If you need support reviewing your funding compliance, explore our Funding Assurance Review or book a confidential consultation with Skills Office Network.
