New for 2026 — School Improvement Programme: a levy-funded Level 6 route for improvement leaders. Find out more
This white paper sets out how schools, trusts and local authorities can respond to the biggest set of apprenticeship funding reforms since the levy launched in 2017. It covers the rule changes, the maths behind co-investment, and the practical implications for school workforce planning.
The 2025 to 2026 apprenticeship funding rules introduce the most extensive reforms since 2017. They are designed to simplify processes, increase flexibility and help schools and trusts get more from levy and non-levy funds.
Since April 2017, employers with an annual pay bill over £3 million pay the apprenticeship levy at 0.5% of their total wage bill. Funds are held in the employer's Apprenticeship Service account for up to 24 months. Government tops up any funds paid in by 10%. Schools, multi-academy trusts and local authorities remain levy payers under these rules.
From August 2025 the calculation is simpler. Each standard publishes its own minimum off-the-job training hours, so providers no longer calculate 20% of contracted hours. Schools have flexibility over how those hours are delivered, provided the minimum is met and evidenced. Duration and OTJT hours are no longer directly linked, and part-time apprentices no longer have to have their programmes automatically extended.
Government still funds 95% of training costs for non-levy payers, with the employer contributing 5%. Small organisations training apprentices under 22 continue to receive full funding with no 5% contribution. Larger levy payers can now transfer up to 50% of their levy funds to smaller employers or partner schools through the Apprenticeship Service.
Foundation Apprenticeships are a new pathway designed to help 16 to 21 year olds gain paid work experience and occupational competence in essential sectors. They can be completed in as little as 8 months and are eligible for the same funding and employer incentives as standard apprenticeships.
The end-point-only assessment model has been replaced by a more flexible approach. Where the standard permits it, assessment can now take place during the apprenticeship as well as at the end. End-point assessment organisations remain responsible for validating results, but the shift better aligns assessment with real job performance and reduces duplication.
The apprenticeship levy is calculated on the combined payroll of the local authority, including teachers paid through the authority's payroll. LAs choose how to distribute the levy and how it is spent. Some hold a central pot and fund whole apprenticeships case by case. Others allocate the levy out to individual business units. In the second model, small schools rarely have enough on their own to fund a whole apprenticeship, so a reconciliation mechanism is essential to keep funds moving before they expire.
Non-levy paying schools reserve apprenticeships through their own Apprenticeship Service account. They pay 5% towards the cost of training and government pays the remaining 95%, up to the funding band maximum. Since April 2024, small organisations pay no co-investment for apprentices under the age of 22.
All previously approved standards remain valid for 2025, with published minimum OTJT hours and funding bands typically between £3,000 and £27,000. Standards most relevant to school settings include Teacher, Teaching Assistant, School Business Professional, HR Support and Facilities Manager, alongside NCE's flagship leadership pathways.
The NCE team is available to work through any of these steps with you. If you would like a briefing tailored to your setting, please get in touch.
Ready to plan your next cohort?
Whether you are shaping a business case, comparing providers or planning a trust-wide programme, we will help you get from question to confident decision.
Get in touchWe're happy to help. Get in touch with our team. Real people, real answers, no pressure.
