The Government Will Pay to Train Your Next Hire

We have spent the last month writing about everything April threw at small businesses. Employment law changes. Making Tax Digital. Business rates. Rising costs. New hiring rules on the horizon. It has been relentless.

So here is something that went the other direction. Something that actually puts money back in your pocket. And almost nobody I have spoken to knows about it.

If you are a small or medium-sized business and you hire an apprentice under 25, the government will now cover 100% of their training costs. Not most of them. All of them. And from October, you get a £2,000 cash incentive on top.

What changed#

The old Apprenticeship Levy became the Growth and Skills Levy in April 2026. Most of the headlines focused on what it means for large employers. But the changes for small businesses are the ones that matter here.

Previously, if you were an SME (a business that does not pay the levy, which is most businesses with a wage bill under £3 million), you had to pay 5% of the apprenticeship training costs yourself. The government covered the other 95%. That 5% does not sound like much, but on a training programme costing £10,000 to £15,000 it was £500 to £750 upfront, on top of paying the apprentice's wages, and it was enough to put a lot of small employers off.

That 5% co-investment is gone. From August 2026, if you hire an apprentice aged 16 to 24, the government pays 100% of the training and assessment costs. You pay nothing towards the qualification. Zero.

The £2,000 incentive#

From the 1st of October 2026, there is a cash incentive as well. Hire a new apprentice aged 16 to 24 and you can claim up to £2,000. The apprentice needs to have joined your business within the last three months, and the payment is made once they complete their first 90 days.

That is not a tax break or a credit. It is actual money paid to your business. You can use it however you want, towards their wages, equipment, or anything else.

Put the two together and you have a situation where the government funds the training entirely and then pays you £2,000 for taking someone on. For a small business that needs an extra pair of hands, this is about as good as it gets.

Who this is for#

This applies to any business that does not pay the Apprenticeship Levy. That means you have a total annual wage bill below £3 million. If you are a small business, a sole trader with a couple of staff, a trades firm, a salon, a shop, a café, that almost certainly includes you.

The apprentice has to be aged 16 to 24 at the start of the programme. They can be a new hire or an existing employee you want to upskill. The training has to be through an approved provider and lead to a recognised apprenticeship standard.

Apprenticeships are not just for school leavers in hard hats. There are approved standards in business administration, customer service, accounting, digital marketing, hairdressing, hospitality, construction trades, motor vehicle service, IT, and hundreds more. If you employ someone doing almost any kind of job, there is probably an apprenticeship standard that fits.

Foundation apprenticeships#

One of the other changes is the introduction of foundation apprenticeships. These are shorter, typically eight months instead of the old 12-month minimum, and designed for younger people who need a structured route into work.

The first seven cover construction, digital, engineering and manufacturing, and health and social care. More are rolling out in retail and hospitality. They are aimed at 16 to 21 year olds and are fully funded.

If you have ever thought about taking someone on but did not want to commit to a 12-month training programme, the shorter option might be worth looking at.

What it actually costs you#

The training is free. The incentive puts £2,000 in your account. But you still pay the apprentice a wage, so it is not zero cost.

The National Minimum Wage for apprentices is currently £7.55 an hour. That applies for the first year of the apprenticeship or until the apprentice turns 19, whichever comes later. After that, they move to the rate for their age group.

At £7.55 an hour for a 30-hour week, that is roughly £11,800 a year in wages. You also pay employer's National Insurance on that. With the Employment Allowance still available at £10,500, your NIC exposure might be minimal depending on your wider payroll.

Compare that to hiring someone at the full National Living Wage of £12.71 an hour with no training support and no incentive. The apprentice route is significantly cheaper, and you get someone who is being trained in the specific skills your business needs.

How to actually do this#

The process is more straightforward than most people expect.

Register on the apprenticeship service. Go to apprenticeships.gov.uk and set up an employer account. You need your PAYE reference number and your accounts office reference number. If you have never registered, you also need to submit at least one payroll return to HMRC first.

Find a training provider. The apprenticeship service has a directory of approved providers. Pick one that delivers training in the standard you want and in your area. Talk to them about what the apprentice will learn, how the off-the-job training works, and what they expect from you as an employer.

Reserve funding. As a non-levy employer, you reserve government funding through your account. You have a three-month window from the reservation date to start the apprenticeship.

Recruit your apprentice. You can advertise through the government's Find an Apprenticeship service, or recruit directly and then enrol them. Many training providers will help with recruitment too.

Start the apprenticeship. The training provider handles the programme. Your apprentice spends at least 20% of their working time on off-the-job training, which can include day release, online learning, or structured activities in the workplace.

If you already have a young employee who could benefit from formal training, you can enrol them as an apprentice without them having to leave and come back. Existing staff are eligible too.

Why this matters right now#

The last few months have been brutal for small business costs. Employer NICs went up. The minimum wage went up. Business rates changed. Energy and fuel costs are climbing again. The FSB's confidence index is still negative.

In that context, a fully funded training programme with a £2,000 cash incentive is not a nice-to-have. It is one of the few things actively working in your favour right now. And unlike most government schemes, this one is not complicated, not means-tested beyond the levy threshold, and not capped at a tiny number of places.

The reason I am writing about it now is that almost none of the small business owners I have spoken to recently know this exists. They know their costs went up. They know hiring is harder. They do not know the government will pay to train their next hire.

If you have been putting off hiring because the numbers do not work, run them again with zero training costs and £2,000 back. The answer might be different.