The Government has introduced significant changes to apprenticeship funding from 1 August 2026, with further incentives launching from 1 October 2026. If you’re an Early Years employer, these updates could make it even more affordable to recruit, train and retain the skilled workforce your setting needs.
Whether you run a nursery, preschool, day nursery, wraparound provision or are part of a larger childcare group, understanding how the new funding rules apply to your organisation will help you maximise the support available.
At Eden, we’re here to help you navigate the changes and ensure you make the most of apprenticeship funding.
Why Apprenticeships Matter in Early Years
With increasing demand for childcare places and continued workforce challenges across the sector, apprenticeships remain one of the most effective ways to attract new talent and develop existing staff.
From recruiting Level 2 and Level 3 Early Years Educators to supporting experienced practitioners into leadership roles, apprenticeships provide a structured pathway to build a confident, qualified workforce while helping to improve staff retention and career progression.
The latest funding changes strengthen that opportunity, particularly for smaller employers.
Understanding Levy and Non-Levy Employers
How your apprenticeship training is funded depends on whether your organisation is a levy-paying or non-levy employer.
If you’re a Non-Levy Employer
If your organisation has an annual payroll of less than £3 million, you are classed as a non-levy employer. This means you don’t pay into the Apprenticeship Service levy fund, but you can still access substantial Government funding for apprenticeship training.
Fully Funded Apprenticeships for 16–24-Year-Olds
From 1 August 2026, non-levy employers no longer have to contribute towards the cost of training and assessment for apprentices aged 16 to 24.
Instead, the Government will fund 100% of the training and assessment costs, up to the maximum funding band for the apprenticeship.
As the employer, you are still responsible for paying your apprentice’s wages, but there is no contribution required towards their training.
For many Early Years settings, this makes recruiting young apprentices one of the most cost-effective ways to grow a skilled workforce.
New £2,000 Hiring Incentive
From 1 October 2026, eligible non-levy employers may also receive £2,000 for every new apprentice aged 16 to 24.
To qualify:
- The apprentice’s practical period must begin on or after 1 October 2026.
- They must not have been employed by your organisation for more than 90 days before their apprenticeship practical period begins.
The payment is made in two instalments:
- £1,000 after 90 days in learning
- £1,000 after 365 days in learning
The apprentice must still be actively undertaking their apprenticeship when each payment becomes due.
Even if you’re using gifted levy funds to pay for apprenticeship training, you may still be eligible for the £2,000 hiring incentive.
Additional National Insurance Savings
There are further savings available for employers.
If your apprentice is under 25, you don’t pay employer National Insurance contributions on earnings up to the Apprentice Upper Secondary Threshold (currently £967 per week).
This means that, alongside funded training, employing an apprentice can significantly reduce your overall recruitment costs.
What About Apprentices Aged 25 and Over?
If you’re a non-levy employer recruiting an apprentice aged 25 or over, you’ll continue to contribute 5% towards the apprenticeship training and assessment costs, with the Government funding the remaining 95%, up to the funding band maximum.
The £2,000 hiring incentive is only available for apprentices aged 16 to 24.
Non-Levy Employer Examples
Recruiting a 17-Year-Old Apprentice
If your nursery recruits a 17-year-old apprentice, you could receive:
- 100% Government-funded training and assessment.
- The existing £1,000 employer payment for eligible 16 to 18-year-olds.
- The new £2,000 hiring payment, provided eligibility criteria are met.
- Employer National Insurance relief.
In simple terms: you could receive fully funded training and up to £3,000 in employer payments, while also benefiting from National Insurance savings.
Recruiting a 22-Year-Old Apprentice
If you recruit a 22-year-old apprentice, you could receive:
- Fully funded apprenticeship training and assessment.
- The new £2,000 hiring payment.
- Employer National Insurance relief.
In simple terms: you could receive fully funded training together with up to £2,000 in hiring support.
Recruiting a 26-Year-Old Apprentice
If you recruit a 26-year-old apprentice:
- You’ll contribute 5% towards the training and assessment costs.
- The Government funds the remaining 95%.
- The £2,000 hiring payment does not apply.
In simple terms: apprenticeships remain a highly affordable way to recruit and develop experienced staff.
If You’re a Levy Employer
If your organisation has an annual payroll of more than £3 million, you’re classed as a levy-paying employer.
Levy employers continue to fund apprenticeship training through their Apprenticeship Service account, using the funds they have already paid through the apprenticeship levy.
What’s Changed?
The main change affects employers who don’t have enough levy funds available.
For apprenticeship starts from 1 August 2026, where there are insufficient funds in the Apprenticeship Service account, the employer co-investment rate increases to 25%, with the Government funding the remaining 75%.
This makes it even more important for larger employers to monitor their levy balance and plan apprenticeship recruitment strategically.
Levy Employer Examples
You have enough levy funds available
If your Apprenticeship Service account has sufficient funds, your apprenticeship training continues to be paid for through your levy account, up to the funding band maximum.
You don’t have enough levy funds available
If your levy funds have been used and you recruit a new apprentice from 1 August 2026, you’ll contribute 25% towards the apprenticeship training and assessment costs.
Before You Recruit an Apprentice
One simple but important step is to ensure your Apprenticeship Service account is fully up to date.
Make sure:
- Your levy status is correct.
- Your PAYE scheme has been added.
- Your organisation details are current.
This is particularly important for non-levy employers, as HMRC PAYE information will be used to determine eligibility for the new £2,000 hiring payment.
How We Can Help
Understanding apprenticeship funding can sometimes feel complicated, but you don’t have to navigate it alone.
At Eden, our team works with nurseries, preschools and childcare providers every day, helping employers understand funding, recruit apprentices and develop talented practitioners who make a real difference to children’s learning and development.
Whether you’re recruiting your first apprentice or planning your workforce for the future, we’ll guide you through the funding available and help you find the right apprenticeship programme for your setting.
If you’d like to find out how these funding changes could benefit your organisation, get in touch with our team today. We’d be delighted to help.