From 1 August 2026, the government is changing how apprenticeship training is paid for. Whether you are a large employer paying the apprenticeship levy or a smaller business that has never taken on an apprentice, the changes affect you.
For many smaller firms, this is the most affordable apprenticeship hiring has ever been. For larger employers, your training budget now needs more careful planning. Here is what is changing, in plain English – and why it matters for Greater Devon.
Why this matters now
The Greater Devon LSIP 2026-2029 identifies access to employment and career pathways as one of four cross-cutting priorities for the region. Apprenticeships are one of the most powerful tools available for converting that ambition into real outcomes.
The evidence is not marketing – it is the government’s own outcome tracking. In 2022/23, 94% of people who completed an apprenticeship were in sustained employment the following year. The South West matches that national figure. No other further education route delivers a higher rate of sustained work or study.
At the same time, Alan Milburn’s independent review into young people and work, published in May 2026, found that just over one million 16 to 24 year olds across the UK are not in education, employment or training – the highest number in twelve years. Devon businesses do not need to wait for government to respond. The funding changes this summer create a genuine opportunity to act now.
What changes on 1 August 2026
Free training for under-25s at smaller businesses
From 1 August, the government will cover 100% of apprenticeship training costs for employees aged under 25 at businesses with a wage bill below £3 million. Previously, smaller employers paid a 5% co-investment contribution. That cost is now removed entirely. For the vast majority of Devon businesses – which are SMEs and micro-businesses – this removes one of the most commonly cited barriers to taking on an apprentice.
Levy accounts tighten up for larger employers
The apprenticeship levy is being rebranded as the Growth and Skills Levy from August, with more flexible ways to spend it including shorter training courses. But the rules are tightening. New money in levy accounts must now be spent within 12 months, down from 24. The government’s 10% top-up bonus ends for new contributions. If your balance runs out, your share of further training costs rises from 5% to 25%. The practical message: plan your training spend now, and do not let your balance expire unused.
Sixteen courses losing funding from September
From September 2026, sixteen apprenticeship standards lose government funding – mostly in leadership and management. Anyone already on these courses can complete them as normal. This is a significant gap. The LSIP evidence is clear that leadership development for supervisors, first-line managers and SME owner-managers is one of the most pressing workforce challenges across Greater Devon. Alternatives exist through the Growth and Skills Levy modular units and the Lifelong Learning Entitlement – signposting employers to these routes is something the Devon Skills Consortium will prioritise as it establishes itself in 2026.
English and maths requirements relaxed
Apprentices aged 19 and over no longer need to pass separate English and maths qualifications. They can demonstrate these skills through real work instead. This change is already in effect.
The money available for hiring young people
Several cash payments are available, and some can be combined. Check eligibility carefully, as each has its own rules.
£2,000 hiring incentive (from 1 October 2026) – for businesses that do not pay the levy, hiring an apprentice aged 16 to 24. The apprentice must have joined your business within three months before their apprenticeship starts, so someone hired from July 2026 onwards can qualify. Paid in two instalments at 90 days and 12 months via your training provider.
£3,000 Youth Jobs Grant (from June 2026) – for any employer, any size, hiring an 18 to 24 year old who has been on Universal Credit for six months or more. Paid directly by the Department for Work and Pensions. This can be combined with the £2,000 above – a single eligible hire could bring in £5,000.
£1,000 young apprentice payment – for employers hiring apprentices aged 16 to 18, or eligible 19 to 24 year olds who are care leavers or hold an Education, Health and Care Plan. Paid in two instalments at 90 days and 365 days.
No employer National Insurance – for any apprentice under 25, for the full duration of the apprenticeship.
One important note: if an apprentice leaves before a payment milestone, that instalment is not paid. Good onboarding and support matter financially as well as being the right thing to do.
Think recruitment, not just training
Apprenticeships are often seen as a training route for existing staff. From this summer, they are also one of the most cost-effective recruitment options available to Devon businesses. A smaller business hiring a 20-year-old from October who has been on Universal Credit for six months could pay nothing for their training, receive £5,000 in combined payments, and pay no employer National Insurance. If cost has been the reason for holding off on a hire, this is the moment to look again.
Foundation apprenticeships give young people who are not yet ready for a full programme a supported entry route, now covering construction, digital, engineering and manufacturing, health and social care, and from April 2026, catering, hospitality and retail. All foundation apprenticeships attract a £2,000 employer payment. Shorter modular courses funded through the levy are also arriving during 2026.
Where to go next
Find training courses and compare providers: findapprenticeshiptraining.apprenticeships.education.gov.uk
Set up your account and advertise vacancies: apprenticeships.gov.uk/employers – your advert will appear on the national Find an Apprenticeship site, which receives over 8 million searches a month.
Get local support: the Devon Chamber LSIP team can help you make sense of what funding applies to your business and connect you with local providers. Contact lsip@devonchamber.co.uk or visit greaterdevonlsip.co.uk
Ask your training provider: most providers will handle advertising, shortlisting and paperwork on your behalf, usually free of charge.
This article is based on GOV.UK guidance and Department for Education announcements current at July 2026. Some operational detail is still being finalised. Always confirm the current rules at gov.uk before making financial decisions.
