• Apprenticeship Funding Guidance for Employers: Your 2025/26 Checklist

    Apprenticeships continue to be one of the most effective ways for employers to build skills, grow talent, and strengthen their workforce. But with funding rules evolving year on year, keeping up with the latest apprenticeship funding guidance can feel overwhelming, especially as we head into 2025/26.

    Whether you’re already using apprenticeships or just starting to explore them, understanding how funding works is essential. The good news? With the right information and support, apprenticeships remain one of the most cost-effective and impactful investments you can make in your people.

    This blog breaks down everything employers need to know in a practical, no-jargon checklist, covering apprenticeship funding for employers, key changes for 2025/26, and what actions to take now.

    Apprenticeship Funding Guidance shown by a red watering can watering the sprouts coming from piles of coins

    Why Apprenticeship Funding Guidance Matters More Than Ever

    Apprenticeships are heavily supported by government funding, but that support comes with rules. Each year, the Department for Education updates its apprenticeship funding guidance to reflect policy changes, funding priorities, and workforce needs.

    For employers, this guidance determines:

    • how much training will cost
    • who is eligible for funding
    • what you can and can’t use funds for
    • how long funding remains available

    Missing key updates could mean lost funding, missed opportunities, or using levy funds inefficiently.

    The 2025/26 apprenticeship funding rules apply to apprenticeships starting between 1 August 2025 and 31 July 2026 and are already shaping how you plan workforce development for the year ahead .

     

    Your 2025/26 Apprenticeship Funding Checklist

    1. Know Which Funding Rules Apply

    The government publishes updated funding rules every year. For 2025/26, these rules outline how apprenticeships are funded, delivered, and assessed across England.

    Key points for employers:

    • Funding rules apply based on the apprenticeship start date, not when you begin planning.
    • Training and assessment costs are covered up to the funding band maximum for each standard.
    • Employers must use an approved training provider like OTMA and end-point assessment organisation.

    Reviewing the current rules early helps you avoid last-minute confusion and ensures compliance from day one.

     

    2. Check Whether You’re a Levy or Non-Levy Employer

    Understanding where your organisation sits is a cornerstone of apprenticeship funding for employers.

    Levy-paying employers

    If your annual payroll exceeds £3 million, you pay the Apprenticeship Levy at 0.5% of your payroll. These funds appear in your Digital Apprenticeship Service (DAS) account and can be used to pay for apprenticeship training and assessment costs .

    Key reminders:

    • Levy funds expire after 24 months if unused. (From April 2026, under the transition to the Growth and Skills Levy (which replaces the current Apprenticeship Levy), unused funds will expire after 12 months.
    • Funds can be used for apprentices at any age or level (within funding rules).

    Non-levy employers

    If your payroll is under £3 million, you don’t pay the levy, but you still benefit from funding.

    For most non-levy employers:

    • The government pays 95% of training and assessment costs.
    • The employer contributes just 5%.

    This makes apprenticeships accessible even for smaller organisations with limited training budgets .

     

    3. Understand What Funding Covers (and What It Doesn’t)

    One common area of confusion in apprenticeship funding guidance is what the funding actually pays for.

    ✔ Funding does cover:

    • apprenticeship training delivery
    • end-point assessment
    • learning resources required by the standard

    ✖ Funding does not cover:

    • apprentice wages
    • travel or accommodation
    • optional qualifications outside the standard

    Being clear on this early helps you budget accurately and avoid surprises later.

     

    4. Plan for Level 7 Funding Changes in 2026

    One of the most significant updates affecting apprenticeship funding for employers is the planned change to Level 7 funding.

    From January 2026, government funding for Level 7 apprenticeships will be removed for learners aged 22 and over, with limited exceptions (such as care leavers). Apprentices who start before January 2026 will continue to receive funding until completion.

     

    5. Use Levy Transfers Where Possible

    Levy transfers remain a powerful but underused part of apprenticeship funding guidance.

    Levy-paying employers can transfer up to 25% of their annual levy funds to other organisations, including:

    • SMEs in their supply chain
    • partner organisations
    • local employers in their region

    This allows unused funds to support workforce development beyond your own organisation while still delivering social and economic value.

     

    6. Factor in Incentives and SME Support

    Government policy continues to prioritise apprenticeships for younger learners and SMEs.

    Recent funding announcements for 2025/26 include:

    • continued incentives for employers recruiting apprentices under 25
    • targeted support for small and medium-sized employers
    • sector-specific initiatives linked to skills shortages

    These incentives can further reduce the cost of apprenticeship training and make apprenticeship funding for employers even more attractive .

     

    7. Choose the Right Training Provider

    Funding rules are only one part of the picture. The right provider will help you:

    • interpret apprenticeship funding guidance correctly
    • ensure compliance with funding rules
    • align apprenticeships with business goals
    • manage admin, reporting, and learner support

    At OTMA, we work closely with employers to translate funding rules into practical, people-focused development plans, so funding supports growth, not frustration.

    Apprenticeship Funding Guidance - shwoing professionals walking down a corridor together while working as an apprentice

    Making Apprenticeship Funding Work for Your Business

    When used well, apprenticeships aren’t just a funding mechanism, they’re a strategic workforce tool.

    Employers who succeed with apprenticeships tend to:

    • plan starts well in advance
    • link training to progression pathways
    • engage line managers early
    • use funding strategically, not reactively

    With the right apprenticeship funding guidance, apprenticeships can deliver measurable improvements in retention, performance, and leadership capability.

     

    Final Checklist: Are You Ready for 2025/26?

    Before the new funding year begins, ask yourself:
     ✔ Do we know whether we’re levy or non-levy?
     ✔ Have we reviewed the 2025/26 funding rules?
     ✔ Are we maximising levy funds before expiry?
     ✔ Have we planned for Level 7 funding changes?
     ✔ Do we know which incentives apply to us?
     ✔ Are we working with a provider who understands our goals?

    If you can’t confidently tick all of these boxes, now is the time to act.

     

    How We Support Employers

    At OTMA, we support employers at every stage, from understanding apprenticeship funding guidance to designing programmes that genuinely develop people.

    We help employers:

    • navigate funding rules with confidence
    • maximise levy and co-investment opportunities
    • plan strategically for 2025/26 and beyond
    • build long-term workforce capability

    If you’d like tailored advice on apprenticeship funding for employers, our team is here to help you turn funding guidance into real-world impact. Get in touch today!