Free Apprenticeships for Under-25s: What the 2025 Budget Means for Employers

The 2025 Budget has delivered a major boost for small businesses looking to invest in young talent.

From April 2026, the government is extending funding to make training under-25s apprentices free for smaller businesses. 

For many smaller and medium-sized companies, it is a great opportunity to reduce recruitment costs, build a team and collect the right skill set with far fewer roadblocks and hurdles. 

This allows teams to grow and talent to be nurtured for more SMEs. 

If you do not pay the apprenticeship levy, this change could make 2026 the ideal time to explore hiring an apprentice.

What is a free apprenticeship?

We understand it might be a little confusing when you hear apprenticeships are now free, so let’s explain what this means. 

When we talk about free apprenticeships for under 25s, we are referring specifically to the training element of the programme. 

What is covered by the budget

• Full cost of apprenticeship training 
• End-point assessment 
• Payments made directly to the approved training provider.

For eligible SMEs, this means zero contribution towards the training fees 

What is not covered

Apprentices are still employees, so you as a company remain responsible for: 

• Apprenticeship wages
• Pension contributions where applicable 
• General employment costs.

Many under-25 apprentices qualify for employer National Insurance relief, which can further reduce employment costs, but wages are still your main responsibility. 

So, while free training for apprentices under-25 at small companies will be active from April 2026, it does not remove normal employment responsibilities. 

What has changed in the 2025 budget?

Until now, most non-levy employers were required to contribute 5% towards apprenticeship training costs, with the government funding the remaining 95%. 

Under the new rules, eligible SMEs hiring apprentices aged under 25 will no longer need to pay that 5% contribution. The government will fund 100% of the training costs. 

For businesses considering under 25 apprenticeships, the removal of that required investment of 5% makes it much more appealing to work with apprentices. For apprentices aged 25 and over, the original 5% co‑investment model still applies. 

What companies are eligible for free apprenticeships?

The extended funding is aimed at smaller businesses that do not pay the apprenticeship levy. 

You are likely eligible if: 

• Your annual payroll is under £3 million 
• You are hiring an apprentice aged 16-24.

The key takeaway is this: if you don’t pay the apprenticeship levy, the government now fully funds training for under-25 apprentices. 

Why free apprenticeships for under-25s matter

For many small businesses, the previous 5% contribution wasn’t huge, but it was enough for many companies to question the viability or to justify and prove a return of investment. 

Now, the cost structure has become much clearer, and how much it costs to employ an apprentice becomes a much more straightforward question. 

With apprenticeship funding for small business covering the full training fee for eligible young apprentices, budgets can go to salaries and other contributions, rather than training costs. This means businesses can explore the benefits of apprenticeships more readily. 

That makes SME apprenticeships a lower-risk way to: 

• Bring in entry-level talent that is a great match for your business 
• Develop skills aligned to exactly what your business needs 
• Address skills shortages of young employees through upskilling
• Build a long-term workforce pipeline by nurturing the new talent.

Instead of paying recruitment fees for experienced hires, you can grow your own talent with government-backed support. 

How employers access the funding

The new government funding will become available once the rules take effect in 1st of April of 2026. 

To access funding, employers can visit the government website and follow the steps required to sign up as an employer of an apprentice, declare they don’t need to pay the apprenticeship levy and work together with a training provider. 

Once the apprentice starts, the government pays the provider directly. You do not need to submit funding claims, and most providers guide SMEs through the setup process step by step. 

If you’ve previously hesitated because of uncertainty around apprenticeship funding, this update makes the system simpler and more financially attractive. So there is no better time than now to find out why an apprenticeship is great for your company. 

What this means for your 2026 hiring plans

The extension of funding to make training under-25s apprentices free for smaller businesses sends a clear message: youth employment and SME growth are priorities. 

If you are considering: 

• Hiring a school or college leaver 
• Creating a new junior role 
• Upskilling an existing team member under 25 
• Expanding your workforce without high upfront training costs 

Now is the time to explore recruiting an apprentice. 

If you’d like clarity or are interested in getting this set up for when it goes into effect from April 1st, now is the ideal moment to reach out to us and see how apprenticeship funding for small business could support your growth in 2026 onwards.