What the April 2026 apprenticeship funding changes mean for SMEs

From 1 April 2026, the apprenticeship funding system is being redesigned to give employers more flexibility to support business growth. 

Here’s what you need to know, without the jargon. 

 

1. Introducing apprenticeship units (modular training) 

The government is launching shorter, modular “apprenticeship units.” 
 
For your business this means you can: 

• Train staff in focused, bite-sized modules 

• Upskill quickly to address immediate skills gaps 

• Avoid having to commit to a full apprenticeship upfront. 

For SMEs, modular units will be fully funded. This makes apprenticeship training far more cost-effective and adaptable to real operational pressures. 

 

2. Funding for SMEs is changing depending on your apprentices’ age 

SMEs will continue to receive 95% funding for training costs for apprentices 25 and over. 

New for April, if the apprentice is aged 16-24, 100% of the training costs will now be covered by the government. 

• If the apprentice is under 25 = fully funded apprenticeships  

• If the apprentice is over 25 = 95% funded 

• Applies to new recruits and existing staff 

• Covers Levels 2-6. 
   

There are also ways to access additional funding - more on that below. 

 

3. Additional incentives 

There is a £1000 incentive for hiring young apprentices if they: 

• Are aged 16-18, or 

• Are 19-24 and have an Education, Health and Care Plan (EHCP) 

In addition, if your apprentice is under the age of 25, you won’t need to pay National Insurance Contributions.  

This is a big step forward to support SMEs by focussing on entry-level talent and workforce growth. 

 

4. Levy transfers are now more valuable 

Large employers can transfer up to 50% of their levy to SMEs. 
 

If you secure a transfer: 

• Training becomes 100% funded 

• No 5% co-investment 

• Applies to units and full apprenticeships. 

If you haven’t explored levy transfers before, now is the time (and Total People can help). 

 

5. Level 7 apprenticeships are changing 

From April, new Level 7 programmes (master’s level) won’t be available for apprentices aged 22+. 
 

Existing learners aren’t affected and all programmes at Level 6 and below continue as normal. 

 

6. Levy funds expire faster for SMEs receiving transfers 

Transferred levy funds will now expire after 12 months instead of 24. 
 

This simply means you will need to plan training start dates more proactively to avoid losing any funding. 

 

So, is this good news for SMEs? 

Overall, yes – if you plan ahead. 

The benefits include: 

• More flexible, modular training options  

• Faster responses to skills shortages  

• No training costs for under-25s 

• Reduced financial risk  

• Much easier to build workforce development plans  

 

So, what are the challenges to be aware of?  

• Restrictions on new Level 7 starts  

• Tighter timelines for using transferred levy funds 
   

Final takeaway 

SMEs greatly benefit from these changes. Apprenticeships remain cost-effective, and in many cases the training now become fully-funded with National Insurance savings. The shift to flexible, modular units means you can upskill staff quickly, address immediate business needs and build long-term talent pipelines. 

 

To find out more about apprenticeship funding and how your business can benefit, you can download ‘The Employers Guide to Funding’ here. 

You can also speak to one of our advisors by visiting the Employer Hub here.