Changes to apprenticeship levy funding

Employer

Overview

From 1 August 2026, we are making changes to the apprenticeship funding system to ensure that levy balances are more closely aligned with our actual budget. 

You can now use funds to pay for apprenticeships, foundation apprenticeships and apprenticeship units.

 

How funding works now

Prior to August 2026, your apprenticeship service account receives notional funds based on your pay bill in England, this includes a 10% government top up.

When you pay for apprenticeship training, the oldest funds in your account are used first.

If you do not use the funds, they expire after 24 months.

 

What will change from 1 August 2026

How funds enter your account

  • you will continue to receive levy funds each month based on your pay bill in England
  • you will no longer receive the 10% government top-up on new funds entering your account 
  • new funds entering your account will expire after 12 months if you do not use them

 

What happens to existing funds

  • funds that entered your account on or before 31 July 2026 will continue to expire after 24 months
  • the oldest funds will continue to be used first when paying for training

 

If you do not use all your levy each year

Your apprenticeship programme will continue as normal.

You may see the balance in your account reduce over time. You will continue to be able to offer apprenticeships and other growth and skills levy products.

 

If you use all your levy funds

If your levy funds run out, you pay part of the remaining training costs. This is known as co-investment.

The co-investment rate will change for new apprenticeships, foundation apprenticeships and apprenticeship unit starts from 1 August 2026.  

Employers will continue to benefit from the 95% rate of government co-investment for existing learners who started before 1 August 2026 (once their levy funds run out). 

 

Co-investment rates

When your levy funds run out, you will pay:

  • 5% for starts up to and including 31 July 2026, with the government paying 95%
  • 0% for starts aged 16 to 24 from 1 August 2026, with the government paying 100%
  • 25% for starts age 25 and over from 1 August 2026, with the government paying 75%

Example: If you have an apprentice on a Customer Service Practitioner Level 2 apprenticeship with a £3,500 funding band funding band and you have exhausted your levy funds:

 

If the learner is aged 16 to 24:

From the 1 August 2026:

  • your contribution will be £0 (0%)
  • government contribution will be £3,500 (100%)

In this example, your business would save £875 in training and assessment costs.

If the apprentice is 25 or over:

From 1 August 2026:

  • your contribution will be £875 (25%)
  • government contribution will be £2,625 (75%)

 

 

You can find more information in the funding rules.

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