Hiring an Apprentice in 2026: Funding for Small Employers
New funding, employer costs and a practical checklist for small businesses
Updated 25 August 2026 • Tax Hub Solutions
For eligible apprenticeship starts in England from 1 August 2026, the government funds 100% of training and assessment costs—up to the funding-band maximum—when the apprentice is aged 16 to 24 at the start. From 1 October 2026, eligible non-levy employers can also receive a £2,000 hiring payment for a new apprentice aged 16 to 24.
Why this matters for small employers
Taking on an apprentice can help a small business build skills around the way it actually works. The financial support has also become more generous. Official Department for Education statistics show 308,770 apprenticeship starts in England between August 2025 and April 2026, an 8.7% rise on the same period a year earlier. Business, Administration and Law was the largest subject area, with 95,980 starts.
The figures show that apprenticeships are not limited to traditional trades. They can support roles in administration, accounting, customer service, digital work, hospitality, retail and many other parts of a growing business.
What changed on 1 August 2026?
For a non-levy employer, the government now pays the full eligible cost of apprenticeship training and assessment for an apprentice aged 16 to 24 at the start of training. Funding is paid directly to the training provider and is limited to the maximum funding band for the chosen apprenticeship.
If the apprentice is 25 or over, a non-levy employer normally pays 5% of the eligible training and assessment cost and the government pays 95%, up to the funding-band maximum. The employer must pay any price agreed with the provider above that maximum.
A £2,000 hiring payment from 1 October 2026
From 1 October 2026, a non-levy employer may receive a £2,000 hiring payment when recruiting a new apprentice aged 16 to 24. The apprentice must start their apprenticeship on or after that date and must have started their job with the employer within the previous three months. The payment is conditional on the detailed funding rules and continued employment at the relevant payment points, so confirm eligibility with the training provider before relying on it in your cash-flow forecast.
Other support that may apply
An additional £1,000 may be available where the apprentice is aged 16 to 18, or aged 19 to 24 with an education, health and care plan or qualifying care experience. It is normally paid through the training provider in two £500 instalments.
For a qualifying apprentice under 25, the employer rate of Class 1 National Insurance is 0% on earnings up to the Apprentice Upper Secondary Threshold. For 2026/27 that threshold is £967 a week. Normal employer NIC rules apply above the threshold.
Learning-support funding may be available to the training provider where reasonable adjustments are needed.
What the employer still has to pay
Government funding is not the same as a free employee. Your business remains responsible for:
The apprentice’s wages and holiday pay
Paid time spent working and completing off-the-job training
Work equipment, software, uniform and travel where applicable
Supervision, mentoring and normal employment costs
Any training price above the apprenticeship funding-band maximum
Minimum pay in 2026
From 1 April 2026, the apprentice minimum wage is £8.00 an hour. That rate applies to apprentices aged under 19 and to apprentices aged 19 or over who are in the first year of their apprenticeship. After the first year, an apprentice aged 19 or over must receive at least the National Minimum Wage or National Living Wage rate for their age. Employers can choose to pay more, and many do to attract and retain suitable candidates.
Your legal and practical responsibilities
An apprentice is an employee. You must provide a real job, an employment contract, an apprenticeship agreement and the opportunity to complete the apprenticeship. You must pay them for both their working time and their required off-the-job training. The contract should be long enough for them to complete the programme.
You will also need an apprenticeship service account and an approved training provider. Funding generally requires the apprentice’s main workplace to be in England, meaning they spend at least 50% of their working time there, and they must have the right to live and work in England.
A practical seven-step checklist
Define a genuine role with useful work, supervision and room to learn.
Choose the apprenticeship standard that matches the role—not simply the cheapest course.
Speak to approved training providers about the programme, timetable and funding band.
Check the candidate’s age at the start date and confirm all incentive conditions in writing.
Budget wages, holiday pay, payroll costs, equipment and management time before recruiting.
Create or use your apprenticeship service account and reserve funding, normally up to three months before the planned start.
Put the employment contract, apprenticeship agreement and training plan in place before training begins.
Example: a small business hiring an 18-year-old
Suppose a small non-levy business in Leeds recruits an 18-year-old for an eligible apprenticeship beginning in October 2026. Training and assessment may be fully government funded up to the funding-band maximum. The employer may also qualify for the £2,000 hiring payment and the additional £1,000 young-apprentice support. However, the business must still pay wages and other employment costs, and should not count any incentive as guaranteed until the provider confirms eligibility and payment conditions.
How Tax Hub Solutions can help
Before you recruit, we can help you build the real employment cost into your cash-flow forecast, set up PAYE, review payroll treatment and keep the wage and National Insurance records in order. Your training provider remains responsible for confirming apprenticeship eligibility and claiming the relevant training funding.
Talk to Tax Hub Solutions: taxhubsolutions.co.uk • 07702 658602
Official sources
Employing an apprentice: funding and employer payments — current GOV.UK guidance
Apprenticeship funding rules: summary of changes — updated August 2026
National Living Wage and Minimum Wage rates — published 1 April 2026
Tax rates and allowances 2026/27 — Apprentice Upper Secondary Threshold
Important: This article covers apprenticeship funding in England and reflects official guidance available on 25 August 2026. Eligibility depends on the individual, employer, apprenticeship and start date. Check the current funding rules and confirm arrangements with the training provider before committing.