Apprenticeship Levy Co-Investment Rates from August 2026: What Employers Pay Now

For apprenticeships starting on or after 1 August 2026 in England, a levy-paying employer whose account has run out pays 25% of the training and assessment cost for an apprentice aged 25 or over, and the government funds 75%. Employers who do not pay the levy still pay 5% for apprentices aged 25 or over. For apprentices aged 16 to 24, the government funds 100% whatever your levy status, up to the funding band maximum.

This guide sets out the rates as written in the Apprenticeship funding rules August 2026 to July 2027 (version 3) and the Growth and Skills Levy reforms factsheet published by the Department for Work and Pensions and the Department for Education. It is for HR, payroll and learning and development teams who need to budget for next year’s starts, not a substitute for the rules themselves.

The co-investment rates at a glance

Co-investment is the share of the agreed price of an apprenticeship that the employer pays when the cost is not met from levy funds. Paragraph 212 of the funding rules says it applies to employers who do not pay the levy and to levy-paying employers with insufficient funds. The rate depends on two facts measured at the start of the apprenticeship training: your levy status and the apprentice’s age.

The 16 to 24 band also covers a 15-year-old whose 16th birthday falls between the last Friday of June and 31 August (paragraph 214). Age is taken on the learning start date recorded by the provider, not on the date you make the job offer (paragraph 29.2).

Levy payers: what changed on 1 August 2026

The Growth and Skills Levy reforms factsheet states that, when levy funds are exhausted, the employer contribution for apprentices aged 25 and over increases from 5% to 25% for new starts, with the government funding the remaining 75%. Two points are easy to miss:

• It only applies to new starts. The factsheet confirms that existing apprentices already on programme keep the previous 95% government rate.
• It only bites when your account is short. Paragraph 189 says funding is decided month by month according to whether levy funds are available in your apprenticeship service account.
• Young apprentices are protected. Paragraph 214.2 says the government funds all costs for apprentices aged 16 to 24 even when a levy payer has insufficient funds.
• Foundation apprenticeships are exempt. The foundation apprenticeship toolkit states that levy-paying employers are exempt from the 25% rate once their funds are exhausted, because foundation apprenticeships are 100% funded for eligible apprentices under 25.

Because new levy funds now expire after 12 months instead of 24 (for funds entering accounts from August 2026), more large employers are likely to hit the point where their account is empty. That is when the 25% rate matters.

Non-levy employers: still 5%, and nothing for under-25s

If your organisation, together with any connected companies or charities, has an annual pay bill of less than £3 million, you are a non-levy paying employer under the funding rules glossary. For apprentices aged 25 or over, paragraph 213.2 keeps the government contribution at 95%, so you pay 5%. The DWP guidance How to take on an apprentice adds that you pay your 5% to your training provider over the lifetime of the apprenticeship, on a payment schedule you agree with them.

For apprentices aged 16 to 24, paragraph 215 is explicit: the provider must not request any employer contribution up to the funding band maximum. Non-levy employers access funding by reserving funds in the apprenticeship service, or by receiving a levy transfer from a larger employer.

Worked examples (illustrative figures)

The funding rules use a £10,000 funding band maximum in their own examples, so we use it here. The calculation simply applies the rates above; your real band depends on the standard.

1. Levy payer, empty account, apprentice aged 28, price £10,000: employer pays 25% × £10,000 = £2,500; the government pays 75% = £7,500.
2. Non-levy employer, apprentice aged 30, price £10,000: employer pays 5% × £10,000 = £500; the government pays 95% = £9,500.
3. Any employer, apprentice aged 19, price £10,000: employer pays £0; the government pays the full £10,000.
4. Price agreed above the band, say £11,000 for a £10,000 band: the extra £1,000 is paid in full by the employer, on top of any co-investment (paragraphs 213.3 and 215.1).

Rules that sit around the rate

The percentage is only part of the cost picture. The funding rules add several conditions that HR teams should build into their budgets and contracts:

• The funding band maximum caps government money. Anything agreed above it is paid in full by the employer.
• Recognised prior learning lowers the price. Paragraph 39.3.2 requires the price to fall by at least 50% of the prior learning percentage: 30% prior learning means at least a 15% reduction, so £8,500 on a £10,000 band.
• No contribution for English and maths, learning support or additional payments may be requested from the employer (paragraph 215.2).
• The apprentice never pays. Paragraph 220 bans asking the apprentice to contribute to training or assessment costs, even if they leave early.
• Levy status changes are not backdated. Paragraph 216.1 says only eligible starts from the date of change qualify for the co-investment waiver.
• Employer-providers delivering to their own staff do not co-invest (paragraph 215.3).

If you are unsure which line of the table applies to a planned start, you can put the exact scenario to the Apprenticeships in England knowledge base, for example: “Our levy account has run out of funds and we want to start a 28-year-old on an apprenticeship from 1 August 2026: what will we have to pay towards the training cost?” The answer cites the paragraph it relies on.

Apprenticeship units follow the same logic

Apprenticeship units are short courses of 30 to 140 hours for existing employees aged 19 and over. According to the apprenticeship unit technical funding guide, for units starting on or after 1 August 2026 the government funds 75% where a levy payer has insufficient funds and the learner is 25 or over, so the employer pays 25%. Learners aged 19 to 24 are fully funded, and all unit learners of non-levy employers are fully funded. Units that started before 1 August 2026 keep the 95% and 5% split.

Checklist before you confirm a start

1. Confirm your levy status: is the combined pay bill, including connected companies or charities, above £3 million?
2. Check your apprenticeship service balance and when your oldest funds expire.
3. Record the apprentice’s age on the planned learning start date.
4. Look up the funding band maximum and agree a price within it, reduced for any prior learning.
5. Agree with the provider a payment schedule for any co-investment and anything above the band.
6. Check whether extra payments apply, such as the £1,000 additional payment for 16 to 18-year-olds.

Sources: Apprenticeship funding rules 2026 to 2027, version 3 and the Growth and Skills Levy reforms factsheet. The rules state they may change at any time, so check the current version before committing to a start.