The Apprenticeship Funding Changes Are Confirmed and In Force
The apprenticeship funding changes announced by the Department for Education took effect on 1 August 2026. Levy funds now expire after 12 months rather than 24, the co-investment rate has quadrupled to 25%, and the 10% government top-up on new levy funds has gone. For recruitment agencies and umbrella companies operating inside levy-paying supply chains, these are settled rules to plan around, not proposals to watch.
This is not the older Growth and Skills direction-of-travel commentary. The rates, dates and defunded standards are published on GOV.UK and apply now.
What Changed on 1 August 2026
Three changes to the Apprenticeship Levy took effect on 1 August 2026, and each affects cost and timing.
- Levy funds now expire after 12 months. Any funds entering an employer’s apprenticeship service account from 1 August 2026 expire after 12 months, down from 24. Funds already sitting in accounts on 31 July 2026 keep the old 24-month expiry. In practice, levy payers must now commit funds twice as fast or lose them.
- Co-investment rose to 25%. Once levy funds are exhausted, employers pay 25% of training costs, with government covering the remaining 75%. That is up from the previous 5% employer share, and it applies to apprenticeships starting after 1 August 2026.
- The 10% top-up has been removed. Levy payers no longer receive the monthly 10% government top-up on new funds entering their accounts.
For an end-client with a large pay bill, the combined effect is a shorter window to spend and a higher bill once the pot runs dry. Agencies relying on client levy transfers to fund training should assume those clients are now managing their accounts more tightly.
Which Standards Were Defunded, and Who Loses Access
Sixteen apprenticeship standards lost government funding from 1 September 2026. The defunded list includes Team Leader (Level 3), Operations Manager (Level 5) and Coaching Professional (Level 5), alongside standards across leadership, management, care and security.
Learners enrolled before September 2026 can complete their programmes. New starters on those standards are ineligible for funding. For agencies that placed candidates into leadership and management pathways, the mid-career training pipeline in those areas has narrowed.
Separately, from 1 January 2026, government funding for Level 7 (master’s-level) apprenticeships is restricted to those aged 16 to 21, extended to under-25 for care leavers and those with an Education, Health and Care Plan. Existing Level 7 learners who started before January 2026 continue to completion. Anyone budgeting for senior professional apprenticeships outside that age band now funds them privately.
The New Money: SME Funding, Units and Hiring Payments
Not every change tightens the purse. Several routes opened up in 2026, and they matter most to smaller employers in temporary-labour supply chains.
From 1 August 2026, non-levy-paying SMEs receive 100% government funding for apprentices aged under 25, removing the previous 5% employer charge. From October 2026, non-levy employers hiring an apprentice aged 16 to 24 receive a £2,000 payment after the apprentice completes 90 days of employment.
Apprenticeship units also launched in April 2026. These are short, modular programmes of 30 to 140 delivery hours in areas including artificial intelligence, leadership, electric vehicle charging, electrical and mechanical fitting, solar PV and welding. They are fully funded for non-levy payers. Levy payers can use their funds on units, but a 50% rule applies: no more than half of annual levy funds may go to units, with at least half reserved for full apprenticeships.
What Agencies and Umbrella Companies Should Do Now
The rules are fixed, so the task is planning against them rather than waiting.
- Confirm whether any end-client with a pay bill above £3 million has funds due to expire under the new 12-month rule, and whether a levy transfer could support training relevant to your workforce before those funds lapse.
- Budget for the 25% co-investment rate on any new apprenticeship starts once client or organisational levy funds are spent.
- Check whether staff were enrolled on any of the 16 defunded standards before 1 September 2026, and whether replacement training now falls outside government funding.
- Keep clear records of apprenticeship and training funding used. That evidence supports supply-chain due diligence when a client examines how you invest in workforce standards.
Use Unspent Levy Through the FCSA Levy Network
The shorter 12-month expiry window means unspent levy is now a use-it-or-lose-it problem for many large employers, and a matching opportunity for the businesses that can put it to work. The FCSA Levy Network connects employers holding unspent levy funds with organisations that want to train apprentices, so that money funds real training rather than lapsing.
For a business taking on an apprentice through the network, 100% of the training cost is covered by transferred levy funds. That removes the 25% co-investment charge that now applies once your own levy is exhausted, and it turns another organisation’s expiring balance into fully funded training for your workforce.
If you want to fund apprenticeship training without carrying the cost yourself, register your interest at the FCSA Levy Network and access unspent levy that covers the full training cost.
Where FCSA Membership Fits
FCSA Membership requires evidence of proper governance and investment in compliant working practices. The apprenticeship funding changes do not alter what FCSA assesses, but they change how agencies and umbrella companies fund the training that keeps compliance embedded, from IR35 awareness through to payroll accuracy.
Agencies that map their training spend against the confirmed 2026 rules now will manage the tighter expiry and higher co-investment without disruption. Search the FCSA Members register to see which businesses have already been independently assessed against FCSA compliance standards.
