Apprenticeship funding is changing: what early years employers need to know

From 1 October there's a new £2,000 payment available for smaller employers.

If you're thinking about taking on an apprentice this autumn, the financial case has changed significantly. Here's what's available, what's new, and what to sort out before you advertise a vacancy.

What you can claim:

• £2,000 SME hiring incentive — new from 1 October 2026

If you don't pay the apprenticeship levy, which covers most nurseries and preschools, you can claim £2,000 for each apprentice aged 16–24. The apprentice must start their apprenticeship on or after 1 October and must have joined your setting within the previous three months.

£3,000 Youth Jobs Grant
Available to all employers, levy-paying or not, for hiring someone aged 18–24 who has been claiming Universal Credit and looking for work for six months or more. This one is paid directly to you rather than through us, and you'll need to speak to your local Jobcentre Plus as well as your training provider.

£1,000 for 16–18-year-olds
Paid for any apprentice aged 16–18, and for those aged 19–24 who have education experience. For the older group, the apprentice needs to give permission for that information to be shared with you.

No employer National Insurance
You pay no employer NICs on apprentices under 25 earning up to £50,270, for the whole duration of their apprenticeship. On a typical early year’s apprentice wage this is often worth more over two years than any single grant payment.

Fully funded training
Since 1 August, the government covers 100% of training costs for eligible apprentices aged 16–24 at non-levy employers. You contribute nothing towards the training itself.

This adds up: A nursery taking on a 20-year-old from October who has been on Universal Credit for six months could receive £5,000 in incentives, pay nothing for training, and pay no employer National Insurance.

Co-investment from 1 August 2026

If you're using a levy transfer - where a larger employer donates unused levy funds to cover your apprentice's training, you may still be eligible for the hiring incentives, but your Apprenticeship Service account needs to be set up correctly for the payments to reach you.

What should employers do?

• Confirm your funding route - Levy, non-levy, levy transfer, or co-investment - this determines everything else and is the most common cause of delayed start dates.
  
  
• Check eligibility - The apprentice must have legally left school, meet residency and employment rules, have a contract long enough to complete the programme, and spend at least half their working hours in England. They can't be on another apprenticeship or overlapping funded learning and must be paid correctly for their age.
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• Check English and maths - Functional Skills are mandatory for 16–18-year-olds without Level 2. For 19+ they're optional under the funding rules, but a Level 3 apprentice still needs Level 2 English to count in your ratios. Add Level 2 maths from the start if they may move into a room leader or management role, as it's much harder to bolt on later.
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• Review prior learning - If the apprentice already has relevant qualifications or experience - common when you're upskilling an existing team member, this must be assessed before they start.
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• Check your Apprenticeship Service account - Make sure this is set up correctly for funding and incentives.

Talk to the Realise team - The new funding rules make early conversations essential. By checking funding, eligibility, English and maths, prior learning and incentive eligibility at the start, early years employers can avoid delays and make confident apprenticeship decisions.