Full funding for under-25s at non-levy employers
Co-investment disappears for younger apprentices at smaller employers, and takes much of the case for levy transfers with it.
From the 2026/27 academic year, small and medium employers who do not pay the levy receive 100% government funding for apprentices aged under 25. The 5% employer co-investment contribution is removed for that group.
What it changed from: non-levy employers paid 5% of training costs up to the funding band maximum, with government covering 95%. Full funding was previously available only in narrower circumstances, typically for apprentices under 21 at employers with fewer than 50 staff.
What follows, and this is the part most people miss: it substantially undercuts the rationale for levy transfers. Large employers have been able to transfer levy funds to SMEs, charities and flexi-job agencies, and many built social value and supply chain programmes around doing so. If an SME can now access full funding directly for anyone under 25, the transfer adds little for that cohort.
Organisations that report levy transfer as a social value metric should revisit what they are actually claiming. The transfer mechanism still matters for apprentices aged 25 and over at non-levy employers, and for cases where an SME wants a specific provider relationship, but the headline case has weakened.
For SMEs the practical effect is that an apprentice under 25 carries no direct training cost. That is worth knowing when you build a training budget or make the case for an apprenticeship programme internally. It is not a reason to prefer younger candidates: age is a protected characteristic under the Equality Act 2010, and selecting on it is unlawful regardless of the funding position.