With significant changes to apprenticeship funding coming into effect, there has never been a better time for small and medium-sized businesses (SMEs) to invest in apprentices. Whether you’re looking to address skills shortages, develop future talent, or grow your business sustainably, the latest government reforms make apprenticeships more accessible and affordable than ever.
What Is an SME in the Context of Apprenticeships?
In apprenticeship funding terms, SMEs (Small and Medium-sized Enterprises) are typically businesses that do not pay the Apprenticeship Levy. These are generally organisations with an annual payroll of less than £3 million.
Unlike larger levy-paying employers, SMEs access apprenticeship funding through government co-investment arrangements, allowing them to recruit and train apprentices at a significantly reduced cost.
What Has Changed?
The government has introduced several changes designed to encourage more SMEs to take on apprentices and help young people enter the workforce.
1. 100% Funding for Apprentices Under 25
From April 2026, the government will fund 100% of apprenticeship training costs for apprentices aged under 25 working for eligible SMEs.
For apprentices aged 25 and over, the government will continue to fund 95% of training costs, meaning employers only contribute 5%.
This change removes one of the biggest barriers to hiring apprentices and makes workforce development significantly more affordable for smaller businesses.
2. Introduction of Shorter Apprenticeship Training Options
New apprenticeship training units will offer greater flexibility for employers, allowing businesses to access targeted skills development without committing to longer programmes where a full apprenticeship may not be required.
Employers can explore available apprenticeship courses through the Government’s apprenticeship training directory.
3. Greater Flexibility Around English and Maths Requirements
Changes to English and maths requirements for some adult apprentices will reduce administrative burdens and remove a common barrier to completion.
This allows both apprentices and employers to focus more heavily on developing the occupational skills needed to succeed in the workplace.
4. New £2,000 Employer Incentive
From October 2026, eligible SMEs will be able to claim up to £2,000 when recruiting a new apprentice aged 16 to 24.
To qualify, the apprentice must have joined the business within the previous three months and started their apprenticeship after October 2026. The first instalment will be paid once the apprentice has completed 90 days on programme.
This funding can help offset recruitment, onboarding, supervision, and training costs. Additional incentives may also be available for employers recruiting eligible young people who meet specific criteria.
Why Are These Changes Important?
The UK continues to face skills shortages across a wide range of sectors, while youth unemployment remains a challenge in many communities.
Apprenticeships help address both issues by enabling young people to gain valuable workplace experience while allowing employers to develop the skills their businesses need.
By making apprenticeships more affordable and accessible, these reforms aim to strengthen the future workforce and create more opportunities for young people to build rewarding careers.
Why Are Apprentices Good for Your Business?
Develop Talent Your Way
Apprentices learn your systems, processes, and company culture from day one, allowing you to develop skills that align with your specific business needs.
Address Skills Gaps
Apprenticeships create a pipeline of future talent, helping businesses overcome recruitment challenges and plan for long-term growth.
Increase Employee Loyalty
Employees who are given opportunities to learn and develop are often more engaged and more likely to remain with the employer that invested in their future.
Bring Fresh Perspectives
Apprentices often introduce new ideas, digital skills, and innovative approaches that can positively influence the wider team.
Cost-Effective Recruitment
With government funding covering most or all training costs, alongside employer incentives, apprenticeships remain one of the most cost-effective recruitment and workforce development options available to SMEs.
Looking Ahead
The apprenticeship landscape is becoming increasingly favourable for SMEs. With fully funded training for many apprentices, additional employer incentives, and greater flexibility in programme delivery, now is an excellent time to consider how apprenticeships could support your business goals.
Businesses that invest in apprentices today can build a stronger, more skilled workforce for tomorrow while benefiting from substantial government support.
Speak to Attwells Solicitors
If your business is expanding, recruiting new staff, or reviewing its employment practices, obtaining the right legal guidance can help ensure your workforce strategy supports long-term growth.
Contact Attwells Solicitors today to discuss your employment law requirements and how we can support your business
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July 19, 2026
