As part of a major government roll-out to break down barriers to technical education and deliver 50,000 new youth apprenticeships, landmark changes to apprenticeship funding have officially taken effect as of August 1, 2026.

The Department for Education (DfE) has confirmed that 100% of training and assessment costs will now be covered for eligible apprentices aged 16 to 24. This expanded full-funding exemption applies universally across all employers—large and small—giving businesses across the East Midlands a major opportunity to recruit and up-skill young talent without training overheads.

Key Funding Changes Breakdown

1. 100% Fully Funded Training for Under-25s

From August 1, 2026, employer co-investment no longer applies to eligible training and assessment costs for apprentices aged 16 to 24.

• Levy-Paying Employers: Once your Apprenticeship Levy funds are exhausted, you will no longer have to pay the standard 25% co-investment contribution for new apprentice starts aged 16–24. The government covers 100%.
• Non-Levy Employers (SMEs): Training costs for new 16–24 year-old apprentices are 100% government-funded (0% employer co-investment).
• Scope: Applies to new starts across the wider Growth and Skills offer, including standard apprenticeships, foundation apprenticeships, and short apprenticeship units.

2. 25% Co-Investment Rate for Learners Aged 25+

For new apprentice starts aged 25 and over, the updated employer co-investment rate is set at 25% once levy funds are exhausted. The government covers the remaining 75%.

• Note: Existing apprentices already on a programme prior to August 1, 2026, will remain on their previous 95% government co-investment rate (5% employer contribution) once levy funds are exhausted.

What This Means in Practice: Cost Savings Example

To understand the financial impact, consider a Customer Service Practitioner Level 2 apprenticeship with a standard funding band of £3,500, where levy funds have been fully utilized:

• For an Apprentice Aged 16 to 24:
  • Employer Contribution: £0 (0%)
  • Government Contribution: £3,500 (100%)
  • Savings: Levy-paying employers save £875 in training costs per apprentice compared to older age brackets.
• For an Apprentice Aged 25 or Over:
  • Employer Contribution: £875 (25%)
  • Government Contribution: £2,625 (75%)

Additional Financial Incentives for Employers

Recruiting an apprentice under 25 brings additional financial support beyond zero training fees:

• Up to £8,000 in Hiring Support & Grants: Small and medium-sized enterprises (SMEs) taking on young apprentices can access a combined package of grants and hiring incentives.
• National Insurance Exemption: Employers pay 0% Class 1 Employer National Insurance contributions for apprentices under the age of 25 earning up to £50,270 per year.
• Targeted Youth Bursary: A new targeted government bursary (worth up to £4,500 per year per household) is being introduced directly for eligible young people from lower-income benefit households. This removes domestic financial barriers for young recruits, ensuring wider access to workplace training without impacting household stability.

Next Steps for Local Employers

Whether you are looking to expand your team with school leavers or up-skill young recruits already in your business, Prostart is here to guide you through the updated Growth and Skills Levy rules.

Our team will help you:

1. Audit your Apprenticeship Service account and check funding eligibility.
2. Maximize available SME grants and National Insurance savings.
3. Source and onboard high-quality 16–24 year-old candidates across Nottinghamshire and Derbyshire.

Ready to recruit or up-skill under-25 talent at zero training cost?

Contact the Prostart Employer Team today to discuss your 2026 workforce planning.