Apprenticeship Funding Changes (From April 2026)

From April 2026, the UK apprenticeship funding system is changing as part of the government’s move towards the new Growth and Skills Levy. These updates will impact how employers plan, fund, and manage apprenticeship training.

The aim of the reforms is to make apprenticeship funding more flexible, ensure levy funds are used more effectively, and continue to support employers in developing skilled workforces.

What’s Changing for Employers?

Levy-Paying Employers

Employers who pay the Apprenticeship Levy will continue to use their digital apprenticeship account to fund training.

However, key changes include:

• Levy funds will now expire after 12 months (reduced from 24 months)
• The current 10% government top-up will be removed
• Funding will continue to be used on a first-in, first-out basis

When Levy Funds Run Out

Once levy funds have been fully used, employers will contribute a higher share of training costs:

• Employers will pay 25% of apprenticeship training costs
• The government will fund the remaining 75%

This is an increase from the previous 5% employer contribution, meaning forward planning of apprenticeship starts will become increasingly important.

Non-Levy (Small and Medium) Employers

For SMEs who do not pay the levy, government support remains strong.

From April 2026:

• Apprentices aged under 25 may be fully funded for training costs (subject to eligibility)
• Most employers will not pay training costs upfront, with government funding covering the majority

This makes apprenticeships an even more cost-effective way for SMEs to recruit and develop new staff.

New Flexibility in Apprenticeships

The reforms also introduce greater flexibility in how apprenticeship funding can be used:

• Employers will be able to access funding for shorter training units (Waterside are offering the Mechanical and Electrical Fitting and Assembly units) and modular learning
• Levy funds may be used more flexibly to meet specific skills needs
• Apprenticeship delivery is expected to become more responsive to industry demand and skills shortages

This will help employers tailor training more closely to workforce requirements.

What This Means for Your Business

These changes are designed to help employers:

• Make better use of apprenticeship funding
• Plan workforce development more strategically
• Address skills shortages more effectively
• Continue accessing high-quality, cost-effective training

However, with shorter levy expiry periods and changes to co-investment, early planning of apprenticeship starts will be increasingly important.

How Waterside Can Help

At Waterside Training, we support employers through every stage of the apprenticeship process, including:

• Understanding funding eligibility and costs
• Planning apprenticeship starts around funding cycles
• Recruiting and selecting suitable candidates
• Delivering high-quality training tailored to your business
• Supporting progression, development, and long-term workforce planning

Need Advice?

If you would like to understand how the 2026 funding changes will affect your organisation, our team is here to help.

📞 01744 616837
📧 [email protected]