Apprenticeship Funding Changes: What Changed on 1 August 2026

Four changes to apprenticeship funding took effect on 1 August 2026. Between them they shorten the clock on levy funds, remove a top-up employers have relied on since 2017, and — for one specific group of apprentices — multiply the employer's contribution by five.

It is easy to read the headline as a flat "co-investment rises to 25%". That is true for some apprentices and completely wrong for others, and the difference is worth thousands of pounds per start. The non-levy side of the change was published back in version 1 of the rules on 15 June. What only landed in version 3, published on 29 July 2026 — three days before the rules took effect — was the age split for levy payers who have run out of funds. Version 1 had said, flatly, that they would pay 25%.

This guide sets out what actually changed, who each change applies to, what it costs in cash, and the one part of your enrolment process that now has a direct effect on the bill.

The wider assessment reforms — Skills England, and the shift from "end-point assessment" to apprenticeship assessment — are a separate story, covered in our guide to the apprenticeship assessment reforms. This piece is about money.

The Four Changes at a Glance

What changed	Before	From 1 August 2026	Who it hits
Levy fund expiry	24 months	12 months (new funds only)	Levy payers
Government top-up	10% on funds entering the account	Withdrawn	Levy payers
Co-investment when levy funds run out	Employer pays 5%	Employer pays 25%	Levy payers, apprentices aged 25+ only
Full funding for young apprentices	Ages 16–21 (plus some 22–24)	All ages 16–24	Non-levy employers, and levy payers with no funds left

Three of these cost employers money. One saves it. Which way it nets out for you depends almost entirely on the ages of the people you are putting through.

Levy Funds Now Expire After 12 Months, Not 24

Funds entering an apprenticeship service account from 1 August 2026 now expire after 12 months if they are not spent. The apprenticeship service's guidance sets it out under two headings. Under "What will change from 1 August 2026":

"New funds entering your account will expire after 12 months if you do not use them."

And under "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."

So this is a transition, not a cliff edge. Every pound banked before 31 July still runs its full 24 months, and the account continues to spend oldest-first. Any communication telling employers that "your levy now expires in 12 months" is wrong for the entire existing balance — which, for a large levy payer, may be most of the money in the account.

Government has been consistent about why funds expire at all. GOV.UK's apprenticeship funding policy document — still written around the 24-month rule, and not yet updated for this change — puts it bluntly:

"This is so levy-paying employers cannot accrue large balances, with the potential to create financial commitments that the government has not planned to meet."

The apprenticeship service frames the 1 August change itself as being "to ensure that levy balances are more closely aligned with our actual budget".

There is also a softener worth understanding. Expiry has always run first-in, first-out, calculated monthly. GOV.UK's published worked example is that if an employer spends in a month at least as much as entered the account 24 months earlier, nothing is removed. That example has not yet been republished for the 12-month clock, so treat the shorter-period version as the expected mechanic rather than a stated rule — but the implication is the same: steady, continuous recruitment largely defuses this change, and stop-start recruitment is what gets punished.

One correction worth making early: it is easy to see this change dated to October 2026. That is a different scheme. 1 October 2026 is the start date for a hiring payment of up to £2,000 for non-levy employers taking on 16- to 24-year-old apprentices as new employees — claimable for starters employed from 1 July 2026, paid via the training provider in two instalments at day 90 and day 365. The expiry change began on 1 August.

The 10% Top-Up Has Gone

Since the levy began, the government added 10% to funds as they entered an employer's account. From 1 August 2026 that stops for new funds:

"You will no longer receive the 10% government top-up on new funds entering your account."

Existing balances keep the top-up they already received. The effect is a straight 9% reduction in the training each future month's levy contribution can buy: £500,000 of levy funds entering an account each year used to arrive as £550,000, and now arrives as £500,000. It is not dramatic month to month, but it compounds across a full budget cycle, and it lands at the same time as the expiry change. Employers who were already planning to spend their balance down will barely notice. Employers who were banking it now face a shorter clock on a smaller pot.

Co-Investment Rises to 25% — But Only for Apprentices Aged 25 and Over

This is the change most likely to be reported wrongly, so it is worth quoting the rules directly. From the Apprenticeship funding rules 2026 to 2027 (version 3), for apprenticeships starting on or after 1 August 2026:

"213.1. For levy paying employers who have insufficient funds, if at the start of their apprenticeship training the apprentice is aged 25 or over, the government will fund 75% of the training and assessment costs (up to the funding band maximum)."

"213.2. For employers who do not pay the levy, if at the start of their apprenticeship training the apprentice is aged 25 or over, the government will fund 95% of the training and assessment costs (up to the funding band maximum)."

Read those together and the picture is narrower than the headline suggests. The 25% employer contribution applies to levy-paying employers who have exhausted their balance, and only for apprentices aged 25 or over at the start of training. A non-levy employer taking on a 30-year-old still pays 5%, exactly as before.

And for younger apprentices, the rules move the other way:

"214. In the circumstances below, for apprenticeships that start on or after 1 August 2026 the government will fund all of the apprenticeship training and assessment costs, up to the funding band maximum of the apprenticeship... 214.2. For levy paying employers who have insufficient funds, if at the start of their apprenticeship training the apprentice is aged between 16 and 24 years old (or 15 years of age if the apprentice's 16th birthday is between the last Friday of June and 31 August)."

A levy payer with an empty account used to pay 5% for a 19-year-old. They now pay nothing.

Existing learners are protected: employers keep the 95% co-investment rate for anyone who started before 1 August 2026, once their levy funds run out.

Expect employers to have read the wrong thing from an official source. DfE's own employer-facing help page, "Changes to apprenticeship levy funding", was last updated on 16 March 2026 and still states a flat 25% co-investment rate from 1 August with no mention of age. Version 3 of the rules supersedes it.

Full Funding Now Reaches 24-Year-Olds

The fourth change is the one that is unambiguously good news for employers, and it is regularly misstated as "25 and under". It is not. It is 16 to 24 — at 25, co-investment returns.

Under the 2025/26 rules, non-levy employers got full funding for apprentices aged 16 to 21, plus 22- to 24-year-olds who had an Education, Health and Care plan or were care-experienced. From 1 August 2026 that widens to every 16- to 24-year-old:

"214.1. Employers who do not pay the levy, if at the start of their apprenticeship training the apprentice is aged between 16 and 24 years old (or 15 years of age if the apprentice's 16th birthday is between the last Friday of June and 31 August)."

For a small employer that had been paying 5% on a 23-year-old apprentice, the contribution is now zero. No further eligibility conditions attach to age, beyond the long-standing provision for a 15-year-old whose 16th birthday falls between the last Friday of June and 31 August.

What This Actually Costs

Take DfE's own published worked example — a standard with a £9,000 funding band maximum — and a levy-paying employer whose account balance is exhausted. These are yearly contribution figures.

Apprentice age at start	Employer paid before	Employer pays now	Difference
19	£450 (5%)	£0	−£450
24	£450 (5%)	£0	−£450
25	£450 (5%)	£2,250 (25%)	+£1,800
45	£450 (5%)	£2,250 (25%)	+£1,800

The cash depends on the funding band for the standard in question, and only bites once the levy balance is actually exhausted.

Two caveats. Level 7 standards are only funded where the apprentice is aged 16 to 21, or 22 to 24 with an EHC plan or care experience (paragraph 32) — so for a 45-year-old on a Level 7, the 25% question never arises, because there is no funding at any co-investment rate. The Level 2 Administration Assistant standard (ST1472) is capped at 16 to 24 in the same way (paragraph 33). Outside those age-gated standards, the shape of the table holds at every band.

That creates an obvious and uncomfortable incentive, and providers should expect employers to notice it. The honest counsel is that apprenticeships for experienced staff now need a stronger business case than they did in July, not that employers should quietly stop recruiting people over 25.

Apprenticeship units are in scope too. Units launched in April 2026 with their own funding rules, and the co-investment change applies to new apprenticeship and apprenticeship unit starts — so the same age split governs a 30-hour unit as a full standard.

Initial Assessment Is a Funding Rule, Not a Formality

Every one of the funding decisions above depends on eligibility being established properly at the start — and the rules put that squarely on the provider:

"27. The provider must ensure that both the learner and programme are eligible for funding by conducting an initial assessment. We do not specify which assessment tools must be used; this is for the provider to determine. The initial assessment must include an assessment of: 27.1. Learner eligibility; 27.2. Recognition of prior learning and experience; 27.3. Learning support; and 27.4. English and maths support."

(Each sub-paragraph carries a cross-reference to the detailed rules, omitted here for readability.)

Two things follow. First, the tool is your choice — there is no approved list, and no funding advantage to any particular platform. Second, and much more consequential this year, recognition of prior learning is a required part of the initial assessment, not an optional refinement.

The rules also set out what has to be evidenced afterwards, and it is more specific than "we did an assessment":

"63. After completing the initial assessment, the provider must be able to evidence that the individual requires significant new knowledge, skills and behaviours in order to be occupationally competent in their job role, and that the training required meets the funding rules. They must discuss or share the outcome of the initial assessment with the individual and their employer, so that all parties understand how this information will inform a tailored training plan."

Initial assessment is an eligible cost in its own right — paragraph 106.1 covers "initial assessment to confirm learner and programme eligibility and the administration related to the subsequent enrolment (onboarding) of the apprentice" — so doing it thoroughly is fundable work rather than overhead.

If the distinction between establishing a level and mapping the detail behind it is not settled in your process, our guide to initial versus diagnostic assessment covers where each one sits.

Prior Learning Just Became a Money Question — For One Group

Recognition of prior learning (RPL) reduces the negotiated price of an apprenticeship where the apprentice already holds relevant skills or knowledge. That has always been the rule. What changed on 1 August is who feels it.

For the one group affected — levy payers with an exhausted balance and an apprentice aged 25 or over — the maths shifts sharply. When the employer contribution was 5%, an RPL reduction moved the employer's bill by a few tens of pounds. At 25%, a reduction in the negotiated price cuts the employer's own contribution by a quarter of that reduction. On a £9,000 band with a £1,500 RPL adjustment, the employer's share falls by £375 rather than £75.

For everyone else the employer's own bill is unaffected. Non-levy employers still pay 5% on over-25s, and for 16- to 24-year-olds the employer pays nothing at all — so an RPL reduction moves the government's bill rather than the employer's. That does not make RPL any less important: the reduction still has to be made and evidenced, and funding is recoverable where it is not. It changes who notices.

Which cuts both ways, and this is the part providers should be thinking hardest about. A weak initial assessment that fails to identify existing skills now visibly overcharges one specific set of employers — the ones most likely to be scrutinising the invoice. One that overstates prior learning reduces the price you can claim. Both errors are auditable.

The Evidence Gap

Here is an awkwardness worth knowing about before an audit finds it for you. Initial assessment is mandatory, must cover prior learning, and must be evidenced — but there is nowhere in the Individualised Learner Record to record its result.

We checked the full field list in the ILR specification 2026 to 2027. There is no field for an initial assessment outcome in any entity, and the specification is explicit that "data that is not required for collection must not be included in the ILR files returned".

There is one adjacent field: PriorLearnFundAdj, "Funding adjustment for prior learning", in the Learning Delivery entity — collected for apprenticeships on component aims, and to be recorded "where applicable". It captures the funding consequence of prior learning, not the assessment that identified it.

What the ILR does require is PriorLevel, in the Prior Attainment entity, with a minimum occurrence of 1. Its stated purpose:

"To allow analysis of the level of prior attainment of learners, to help with value-added analysis and to ensure funding and delivery is targeted at key groups. Validation of funding eligibility for Adult Skills and Adult Skills Fund learners."

And: "You must return complete data and must only return 'not known' in exceptional circumstances."

So the practical position is this. PriorLevel is used for eligibility validation on Adult Skills and ASF learners, and for analysis across the rest — including apprenticeships. The initial assessment is what gives you a defensible basis for the figure either way. But the assessment itself lives in the learner's evidence pack, not the data return — which means the quality of your evidence pack, not your ILR, is what stands up when someone asks how you arrived at it. That is the job our Evidence Pack export does: an RQF-levelled results CSV, the prior attainment inputs, and tamper-evident per-assessment PDFs, bundled per cohort.

Providers delivering the ASF English, maths and digital entitlement face a parallel requirement, and one more demanding still. Section 2.5 of the ASF rules requires a thorough initial assessment against the national literacy and numeracy standards and the national standards for essential digital skills, an appropriate diagnostic assessment, enrolment at a level above the assessed level, ongoing assessment to support learning, and that you "record the evidence of all assessment outcomes in the evidence pack". Our Adult Skills Fund provider guide covers the 2026/27 funding year in full.

One administrative note that catches people out: responsibility for adult skills policy transferred from DfE to the Department for Work and Pensions on 16 September 2025, and DfE continues to implement the ASF on DWP's behalf. That transfer is not confined to ASF — the 2026 to 2027 apprenticeship funding rules are themselves now published on GOV.UK by DWP, with the apprenticeship service still run by DfE. Worth knowing if you search by publishing department.

What Providers Should Change Now

Re-run your employer conversations by apprentice age. Any employer with 25+ apprentices in the pipeline and a thin levy balance is facing a bill they have probably not modelled. Better they hear it from you in August than from an invoice in November.

Check which version of the rules your team is working from. Version 3 was published on 29 July 2026 and changed the co-investment position. Anyone briefed from version 1 or 2 is giving employers the wrong answer. (The landing page was updated again on 3 August, but only to add separate guidance on privately funded apprenticeships.)

Assume the official help pages are behind. DfE's employer help page still carried the unqualified 25% figure as of its 16 March 2026 update.

Treat RPL as a costed step, not a tick box. Make sure whoever does the initial assessment can actually identify prior skills, and that what they find is written down in a form that survives audit.

Watch the expiry clock per employer, not in aggregate. Because expiry is first-in, first-out and calculated monthly, an employer with steady recruitment may lose nothing at all. Model it employer by employer.

Do not restate the English and maths rules as new. The change letting employers decide whether apprentices aged 19+ must complete level 2 English and maths took effect in February 2025, not 2026. The 2026/27 rules only clarify it.

Where Digital Skills Assessment Fits

If the initial assessment now carries this much financial weight, it needs to be quick enough that nobody skips it and precise enough that the level survives scrutiny.

Digital Skills Assessment runs an adaptive assessment across digital, English and maths that places a learner from Entry Level 1 to Level 3, typically in 15 to 25 minutes per subject, because the engine targets the learner's ability boundary rather than testing everything. It returns both a headline working level and a domain-by-domain breakdown, which is what makes it usable as evidence of prior attainment rather than just a placement decision. Results are mapped to five awarding body frameworks — Pearson/BTEC, BCS, NCFE, City & Guilds and Open College Network London Region — and to the national standards for essential digital skills and the national literacy and numeracy standards. Every assessment produces a PDF evidence report for the learner's file.

Education pricing is per learner, per year, with unlimited assessments across all three subjects: £750 for up to 100 learners (£7.50 each), £1,500 for up to 250, £2,500 for up to 500, £4,000 for up to 1,000, with larger bands to 5,000 and custom pricing above that. Plans run 12 months and then roll, and include the organisation dashboard, team management and PDF evidence reports. Assessing only occasionally? The Starter Pack is £49.99 for 10 credits that never expire. For employers assessing their own workforce, Business Basic is £99 per month for 25 universal credits and Business Ultimate £249 per month for 100.

You can try the free demo before committing to anything, or see how this works at volume on our apprenticeship providers page.

The Bottom Line

The 1 August changes are not a uniform squeeze. They shift money towards younger apprentices and away from older ones, shorten the clock on new levy funds, and quietly raise the stakes on a step most providers already treat as routine. The employers who will be angriest in six months are levy payers with exhausted balances and a pipeline of over-25s — and the providers who handle that well will be the ones who ran the numbers in August, got prior learning right at enrolment, and can show their working.

Frequently Asked Questions

What apprenticeship funding changes took effect on 1 August 2026?

Four. Levy funds entering an apprenticeship service account from that date expire after 12 months instead of 24; the 10% government top-up on new funds was withdrawn; employer co-investment rose from 5% to 25% for levy-paying employers with insufficient funds where the apprentice is aged 25 or over; and full government funding was extended to all apprentices aged 16 to 24 at non-levy employers, and at levy payers who have exhausted their balance.

Do my existing apprenticeship levy funds now expire after 12 months?

No. Funds that entered your account on or before 31 July 2026 keep the 24-month expiry period. Only new funds entering from 1 August 2026 are on the 12-month clock. Accounts continue to spend the oldest funds first, and expiry is calculated monthly on a first-in, first-out basis, so an employer spending steadily may lose nothing at all.

Does the 25% co-investment rate apply to every employer?

No, and this is the most commonly misreported part of the change. The 25% rate applies only to levy-paying employers who have run out of levy funds, and only where the apprentice is aged 25 or over when training starts. Non-levy employers still pay 5% for apprentices aged 25 or over. For apprentices aged 16 to 24, both levy payers with insufficient funds and non-levy employers now pay nothing.

Is initial assessment a requirement for apprenticeship funding?

Yes. Paragraph 27 of the apprenticeship funding rules 2026 to 2027 requires providers to conduct an initial assessment covering learner eligibility, recognition of prior learning and experience, learning support, and English and maths support. The rules do not specify which assessment tool you must use — that is for the provider to determine — but paragraph 63 requires you to evidence that the apprentice needs significant new knowledge, skills and behaviours, and to share the outcome with the apprentice and their employer.

Where do I record an initial assessment result in the ILR?

You do not. The ILR specification for 2026 to 2027 contains no field for an initial assessment result, and the specification states that data not required for collection must not be included in the files returned. What the ILR does require is PriorLevel in the Prior Attainment entity. A related field, PriorLearnFundAdj, records the funding adjustment arising from prior learning where applicable — but not the assessment behind it. The assessment belongs in the learner's evidence pack.

Did the English and maths requirements for apprentices change in 2026?

No. The substantive change — allowing employers to decide whether apprentices aged 19 or over must complete level 2 English and maths — took effect in February 2025. The 2026/27 rules only clarify how it works, including that the initial assessment must determine the level at which English and maths start, and that this training must not be delivered entirely by self-directed distance learning. For apprentices aged 16 to 18, English and maths remain mandatory. Note the carve-out in paragraph 48.1: where the apprentice already holds a suitable equivalent qualification, or is 19+ and the employer has not agreed to include English and maths, there is no mandatory requirement to carry out any form of English or maths assessment at the initial assessment stage.

Why did the government shorten the levy expiry period?

GOV.UK's apprenticeship funding policy document explains why funds expire at all: "This is so levy-paying employers cannot accrue large balances, with the potential to create financial commitments that the government has not planned to meet." The apprenticeship service describes the 1 August 2026 change itself as being to ensure levy balances are more closely aligned with the actual budget.