Last reviewed: 15 July 2026 against version 1 of the 2026 to 2027 funding rules.
The 25% rate does not apply to every employer and it does not begin in April. The rules below apply to new starts from 1 August 2026.
The 25%, 5% and fully funded decision table
Co-investment applies when apprenticeship training is not fully paid from an employer's apprenticeship service account. From 1 August 2026, the correct route depends first on levy status, then on available funds or the apprentice's age.
| Employer and learner position | Employer pays | Government pays |
|---|---|---|
| Levy payer with enough account funds | Paid from account | Not a co-investment case |
| Levy payer with insufficient account funds | 25% | 75% |
| Non-levy employer; apprentice aged 25 or over at the start | 5% | 95% |
| Non-levy employer; apprentice aged 16 to 24 at the start | 0% | 100% |
All percentages apply only up to the funding band maximum. If the negotiated price is above that maximum, the employer pays the excess in full. Providers should also check the precise age and eligibility wording in the rules, including the limited case where a learner is still 15 immediately before their sixteenth birthday.
Worked examples
Example 1: levy payer with an exhausted account. A £9,000 negotiated price within the band creates a £2,250 employer contribution and a £6,750 government contribution for a new start from 1 August.
Example 2: non-levy employer with a 31-year-old apprentice. On the same £9,000 price, the employer pays £450 and government pays £8,550.
Example 3: non-levy employer with a 22-year-old apprentice. Government funds the £9,000 training and assessment price in full, provided the learner and programme meet the funding rules.
The August rule is framed around whether the employer pays the levy and the apprentice's age. The older “fewer than 50 employees” shortcut is not the correct test for this new under-25 route.
The separate levy-expiry change
Government employer guidance also says new funds entering a levy account will expire after 12 months if unused. Funds that entered on or before 31 July 2026 continue under the 24-month expiry treatment. This can push a levy payer into the insufficient-funds route sooner, but it does not change the 5% route for a non-levy employer with an apprentice aged 25 or over.
What providers should do before 1 August
- Segment the pipeline by levy status, available account funds, apprentice age at start and negotiated price.
- Replace any blanket statement that “co-investment rises to 25%” with the decision table above.
- Reissue quotations for planned August starts where the wrong contribution was assumed.
- Record the learner's age and funding route in the employer approval workflow, rather than relying on a sales spreadsheet.
- Flag any price above the funding band maximum separately from co-investment.
- Use levy transfers where appropriate, but verify the current transfer and subsidy-control rules for each case.
The commercial message is more positive than the original blanket headline suggested. Some levy payers with exhausted accounts will face a material increase, but non-levy employers retain a 5% route for older apprentices and receive full funding for eligible younger apprentices. Accurate segmentation is therefore more valuable than a generic warning campaign.
Frequently asked questions
Does every employer move from 5% to 25% co-investment?
No. For new starts from 1 August 2026, the 25% rate applies to levy-paying employers whose apprenticeship service account has insufficient funds. A non-levy employer pays 5% for an apprentice aged 25 or over, while eligible apprentices aged 16 to 24 with a non-levy employer are fully funded up to the funding band maximum.
When do the new apprenticeship co-investment rates begin?
The new rates apply to apprenticeships starting on or after 1 August 2026. The funding rules in force on the apprentice's start date determine the relevant route.
What happens above the funding band maximum?
The employer must pay all negotiated training and assessment costs above the funding band maximum, regardless of the co-investment route.
Sources & further reading
- Apprenticeship funding rules 2026 to 2027: summary of changes — GOV.UK — Apprenticeship funding rules 2026 to 2027: summary of changes — GOV.UK
- Apprenticeship funding rules and assessment plan guidance 2026 to 2027 — GOV.UK — Apprenticeship funding rules and assessment plan guidance 2026 to 2027 — GOV.UK
- Growth and Skills Levy employer guidance — GOV.UK — Growth and Skills Levy employer guidance — GOV.UK