For small businesses, recruiting new people can be a significant decision. You need to consider the cost of recruitment, the time involved in finding the right candidate and whether you have the capacity to support someone as they develop within the business. At the same time, finding experienced candidates with the right skills can be increasingly difficult, particularly when larger organisations are competing for the same talent. The good news is that new Government apprenticeship incentives are making it easier for small businesses to bring new people into their teams and invest in future talent.
From October 2026, eligible non-levy employers can receive a £2,000 apprenticeship hiring payment when recruiting a new apprentice aged 16 to 24. This is particularly significant for small businesses because most smaller employers do not pay the apprenticeship levy, meaning they can benefit directly from the new payment when they recruit an eligible young apprentice. The payment applies to apprentices starting from 1 October 2026, subject to the relevant eligibility criteria and funding rules.
The £2,000 hiring payment is only one part of the support now available. From August 2026, eligible apprentices aged 16 to 24 can have 100% of their apprenticeship training and assessment costs funded by the Government, up to the relevant funding band maximum. This applies to non-levy employers, which means many small businesses can recruit and develop young apprentices without having to cover the full cost of their apprenticeship training. If the agreed training and assessment cost is above the funding band maximum, the employer is responsible for the difference.
For a small business, this can make a significant difference to the decision to recruit an apprentice. Rather than needing to find a large training budget alongside the cost of employing someone, eligible businesses can access Government-funded apprenticeship training while benefiting from additional employer incentives. This makes apprenticeships a practical way to bring new talent into the organisation while developing the skills the business needs.
There is also a £1,000 additional payment available to employers when they recruit eligible apprentices aged 16 to 18, or apprentices aged 19 to 24 who have an Education, Health and Care plan or who have been in care. This payment is designed to help employers with the additional costs associated with supporting eligible apprentices in the workplace and is paid to the employer through the training provider in two instalments.
Small businesses may also be able to access a £2,000 incentive when recruiting an eligible Foundation Apprentice. Foundation Apprenticeships provide young people with the opportunity to gain valuable workplace experience and develop skills that can support progression into further apprenticeships and employment. The Foundation Apprenticeship incentive is available to eligible employers across a range of sectors, including areas such as digital, retail, administration, health and social care, engineering and hospitality.
Another form of support worth understanding is the £3,000 Youth Jobs Grant. Eligible employers can receive this when recruiting an apprentice aged 18 to 24 who has been unemployed and claiming Universal Credit for six months or more, subject to the relevant criteria. Unlike some apprenticeship payments, the Youth Jobs Grant is available to employers of all sizes, so small businesses can potentially benefit from this support too.
One of the most important things for small businesses to understand is that these different forms of support can potentially be combined. The Government’s apprenticeship funding guidance confirms that eligible employer payments can be combined for the same apprentice. Depending on the apprentice and the circumstances of your business, you could potentially access the £2,000 hiring payment alongside other eligible employer payments, while also benefiting from funded apprenticeship training.
This means that the financial support available can be much greater than one incentive alone. For example, an eligible small business recruiting a young apprentice could potentially access the £2,000 hiring payment alongside the £3,000 Youth Jobs Grant if the apprentice meets the relevant eligibility criteria. Other employer payments may also be available depending on the apprentice’s circumstances. The exact combination will always depend on the funding rules and the individual circumstances of the employer and apprentice.
Small businesses should also be aware of National Insurance support. Employers may not usually need to pay employer Class 1 National Insurance contributions for qualifying apprentices under the age of 25, subject to the relevant apprenticeship and earnings conditions. This is separate from the apprenticeship funding and employer incentives, providing another potential reduction in the overall employment costs associated with recruiting an eligible young apprentice.
When all of this support is considered together, apprenticeships can become a particularly attractive option for small businesses. However, the biggest benefit is not simply the financial support available. Apprenticeships give employers the opportunity to recruit for potential rather than competing exclusively for experienced candidates.
A small business can bring someone into the organisation, introduce them to its systems and processes and develop their skills around the way the business actually operates. Instead of hiring someone who has already spent years working in a different environment, you can support an apprentice as they build their professional knowledge and become familiar with your customers, culture and expectations.
This can be particularly valuable for small businesses because every member of the team can have a significant impact. As an apprentice develops, they can take on more responsibility, contribute more independently and become a valuable part of the organisation. Over time, they can also progress into more senior positions, helping the business build its own talent pipeline rather than relying entirely on external recruitment.
Apprenticeships can also help small businesses address skills shortages. If you are struggling to find candidates with the exact combination of skills you need, recruiting for attitude, potential and willingness to learn can open up a much wider talent pool. The apprenticeship programme then provides the structured training needed to develop those skills while the apprentice gains practical experience in the workplace.
This approach can be particularly useful for businesses that are growing but do not necessarily have the resources to compete with larger employers for experienced professionals. Rather than trying to find someone who is already fully trained, you can invest in someone who has the potential to become exactly the kind of employee your organisation needs.
Of course, recruiting an apprentice still comes with responsibilities. Apprentices are employees and must be paid for their normal working hours and training, with at least the relevant National Minimum Wage. Employers also need to provide appropriate workplace support, supervision and opportunities for the apprentice to develop their skills. Apprentices must receive at least 20% of their normal working hours as protected off-the-job training.
This is why choosing the right apprenticeship and training provider is so important. The best apprenticeship recruitment decisions are not simply about accessing Government funding. They are about finding someone who is a good fit for the business and providing them with the environment and support they need to succeed.
For small businesses that have never recruited an apprentice before, the process can initially feel complicated. You may not know which apprenticeship standard is right for the role, what funding you could access or where to find suitable candidates. This is where an experienced training provider can make the process much easier.
At Educationwise, we offer a free apprenticeship recruitment service to help employers find the right apprentice for their business. We can advertise your vacancy, attract suitable candidates and shortlist applicants, reducing the time and pressure involved in managing the recruitment process yourself.
We can also help you understand the apprenticeship programmes available and explain the funding and incentives that may apply to your organisation. This means you can make decisions with a clearer understanding of the support available before you recruit.
For small businesses, the new apprenticeship incentives represent a valuable opportunity to think differently about recruitment. You do not have to compete solely for experienced candidates or wait until you can afford to build a large training programme. You can bring new talent into your team, develop their skills around your business and potentially access significant Government support while doing so.
The new incentives also reinforce the wider value of apprenticeships as a workforce development strategy. They allow businesses to invest in people while helping young people gain real workplace experience, recognised qualifications and the skills they need to build their careers.
If you are a small business considering recruiting an apprentice, now is a good time to understand what support your organisation could access. From fully funded training for eligible young apprentices to the new £2,000 hiring payment, additional employer payments, the Youth Jobs Grant and National Insurance support, there are several different forms of Government assistance available depending on your circumstances.
At Educationwise, we can help you understand your options, identify the right apprenticeship programme and use our completely free recruitment service to help you find the right person for your business. If you are looking to grow your team, address a skills gap or invest in future talent, speak to Educationwise today and find out what the new apprenticeship incentives could mean for your organisation.
Government apprenticeship funding, incentives and eligibility criteria are subject to change. The information in this article relates to apprenticeship funding in England and is intended as general guidance. Please check the latest Government guidance or speak to Educationwise for the most up-to-date information relevant to your organisation.