HR managers are under increasing pressure to deliver ‘more’.
More skills, more retention, more leadership – often with fewer resources.
But what if one of the most powerful tools at your disposal is already being paid for?
Welcome to this article about apprenticeship funding rules, where we guide you through a government-backed framework that, when understood and applied strategically, can unlock serious ROI for your business.
At Instep UK, we specialise in helping businesses turn their Apprenticeship Levy into a leadership development engine.
And in this guide, we’ll break down what the latest apprenticeship funding rules mean for you, how to make the most of them, and why now is the time to act.
What Are Apprenticeship Funding Rules?
The apprenticeship funding rules are the official guidelines set by the UK government that determine how apprenticeship training is funded, delivered, and assessed. These rules apply to all apprenticeships in England and are updated annually to reflect policy changes and best practices.
For the 2025–2026 academic year, the rules cover everything from:
- Who is eligible
- How much funding is available
- What counts as off-the-job training
- How end-point assessments are managed
If your business has a payroll over £3 million, you’re already paying into the Apprenticeship Levy – a tax that funds apprenticeship training.
But here’s the catch: if you don’t use it, you lose it.
Apprenticeship funding rules dictate that your levy expires after 24 months, and many businesses are letting that money slip through their fingers.
How the Apprenticeship Levy Works – A Quick Refresher
Understanding the mechanics of the levy is key to unlocking its value:
- Who pays it?
All UK employers with an annual payroll over £3 million. - How much?
0.5% of your total payroll, minus a £15,000 annual allowance. - Where does it go?
Into your Apprenticeship Service account, where it can be used to fund apprenticeship training and assessment. - What if you don’t use it?
Funds expire after 24 months. You can also transfer up to 25% of your funds to other companies within your supply chain or sector.
Why HR Managers Should Care
As Al Bird, CEO of Instep UK, recently wrote in FE News:
“The Apprenticeship Levy is still one of the most underrated investments the government has made in workforce development. It’s not just about training, it’s about building capability, improving retention, and creating a culture of growth.”
For HR leaders, using the apprenticeship funding rules to your advantage creates a golden opportunity to:
- Build leadership pipelines
- Upskill existing staff
- Improve employee engagement
- Reduce recruitment costs
- Deliver measurable ROI
What’s New in the 2025–2026 Apprenticeship Funding Rules?
The latest guidance from the Department for Education regarding apprenticeship funding rules introduces several updates that HR managers should be aware of:
1. Off-the-Job Training
Apprentices must receive a minimum number of hours of off-the-job training, delivered during paid working hours. This training must be directly relevant to the apprenticeship standard.
At Instep, we offer flexible delivery models, including blended and remote learning, to minimise disruption while meeting compliance.
2. Funding Bands
Each apprenticeship standard has a maximum funding band.
If your chosen programme costs more than this cap, your business must cover the difference. Choosing the right provider ensures you stay within budget without compromising quality.
3. End-Point Assessment (EPA)
New rules clarify how EPAOs (End-Point Assessment Organisations) must operate, ensuring consistency and quality. Instep works only with approved EPAOs to ensure smooth, compliant completions.
4. Employer Responsibilities
Employers must sign an Apprenticeship Agreement and maintain accurate records. Instep supports you with full compliance management, so you can focus on outcomes, not admin.
How to Maximise ROI from Apprenticeship Funding
Here’s how to turn the apprenticeship funding rules into results:
Focus on Leadership Apprenticeships
Leadership and management apprenticeships are ideal for developing internal talent. Instep offers:
- Manage with Impact Level 3
- Lead with Impact Level 5
- Coach with Impact Level 5
- Data Skills Confidence Level 3
- Business Change Excellence Level 4
- Customer Service Excellence Level 3
- Women+ in Management Level 3
- Women+ in Leadership Level 5
- Global Majority Apprenticeship Level 3
- Global Majority Apprenticeship Level 5
These programmes are fully fundable through the levy and align with your strategic goals.
Act Before Funds Expire
Levy funds expire 24 months after they’re paid in.
If you’re not using them, you’re losing them. Instep can help you audit your levy account and build a plan to use it effectively.
Choose the Right Partner
Navigating the rules can be complex. That’s why working with a trusted provider like Instep UK is key. We handle:
- Programme design
- Compliance
- Delivery
- Reporting
- End-point assessment coordination
Top 5 Mistakes Employers Make with the Apprenticeship Levy
Avoid these common pitfalls:
- Letting funds expire
Many employers don’t realise they’re losing thousands each month. - Not aligning apprenticeships with business goals
Training should support succession planning, not just tick boxes. - Choosing the wrong provider
Poor delivery leads to poor outcomes and wasted investment. - Underestimating off-the-job training flexibility
It can be delivered in bite-sized, business-relevant formats. - Failing to track ROI
Instep helps you measure impact through performance and retention metrics.
HR Leader’s Apprenticeship Checklist
Use this quick checklist to assess your readiness:
- Have you reviewed your levy account balance?
- Do you have leadership gaps or succession risks?
- Have you mapped apprenticeship standards to roles?
- Are you working with a trusted training provider?
- Do you have a plan to use expiring funds?
Real-World Results
One of our clients, a major national UK bakery, used their levy to launch a leadership apprenticeship programme for their managers. The impact of these apprentices?
- £400,000+ annual cost savings
- Embedded culture of continuous improvement
- Learners reported gaining more clarity, self-awareness and confidence
That’s the power of using apprenticeship funding rules strategically.
What’s Next?
“We need to stop thinking of the levy as a tax and start seeing it as a talent investment fund. When used properly, it’s one of the most powerful tools HR leaders have to drive change.” – Al Bird, CEO, Instep UK
If this is your first foray into the world of apprenticeship funding rules, then our advice is to start small.
Identify one department or team where leadership development is a priority. Then, book a free consultation to explore the right apprenticeship standard for your goals.
Book Your Free Educational Consultation
If you’re an HR leader or Learning & Development specialist, now is the time to act. Don’t let your levy go to waste. Let’s turn it into leadership.
Book a free educational consultation with one of our experts today. We’ll help you:
- Understand the apprenticeship funding rules
- Audit your levy usage
- Design a bespoke leadership apprenticeship strategy
Let’s build the leaders your business needs – and let the government pick up the tab.
