Level 7 Apprenticeship Funding: 2026 Changes Guide

From 1 January 2026, significant changes are coming to Level 7 apprenticeship funding in England. The government is refocusing investment towards young people at the start of their careers, fundamentally changing how Level 7 apprenticeships are funded for most learners.

This comprehensive guide explains everything employers and training providers need to know about Level 7 Apprenticeship Funding from 2026 onwards.

What is Changing from 1 January 2026?

The government has announced a fundamental shift in how Level 7 apprenticeships are funded as part of the transition to the Growth and Skills Levy. Here are the key changes:

Government Funding Will Be Limited

Level 7 apprenticeships will remain government-funded only for:

• Young people aged 16-21 at the start of their apprenticeship
• Apprentices under 25 who are care leavers
• Apprentices under 25 with an Education, Health and Care Plan (EHCP)

All apprentices must start their apprenticeship in England to qualify for government funding.

Existing Apprentices Are Protected

Important: Any apprentice who started a Level 7 apprenticeship before 1 January 2026 will continue to receive government funding through to completion, regardless of their age. This protection ensures learners already on their apprenticeship journey won't be disadvantaged by the policy change.

Why Is Level 7 Apprenticeship Funding Changing?

The government is realigning apprenticeship investment priorities. Rather than supporting experienced professionals with higher levels of prior learning and qualifications, funding is being redirected towards young people at the beginning of their working lives.

This policy shift aims to:

• Support youth employment and skills development
• Focus resources on foundational career development
• Maximise the long-term impact of apprenticeship investment
• Align with the broader Growth and Skills Levy objectives

Learn more about the Growth and Skills Levy.

Level 7 Fee Pay Route: Commercial Funding Option

From 1 January 2026, employers can still offer Level 7 apprenticeships through a fee pay route – a commercially funded alternative to government funding.

How the Fee Pay Route Works

Under the Level 7 fee pay route:

• Employers fund the apprenticeship directly at a rate agreed with their chosen training provider
• No government funding is involved (except for eligible age groups mentioned above)
• The apprenticeship must still meet all statutory requirements as defined in the Apprenticeships, Skills, Children and Learning Act 2009
• The apprenticeship standard must be approved for delivery on the Skills England website

Uncertainty About Standards

There is currently some uncertainty about whether fee pay Level 7 apprenticeships starting from January 2026 will be delivered on:

• The outgoing apprenticeship standard, or
• The incoming revised standard (which was paused by the government)

Latest Update: According to the Level 7 Trailblazer Group, Skills England aims to publish the new Level 7 standard by 31st March 2026, with the standard expected to go live for enrolments in quarter two of 2026.

Training providers and employers should stay informed about these developments when planning Level 7 apprenticeship delivery.

National Insurance Exemption for Fee Pay Apprentices

Excellent news for employers: HMRC has confirmed that Level 7 apprentices under the fee pay route are exempt from National Insurance Contributions, providing significant cost savings.

Exemption Criteria

The National Insurance exemption applies when all of the following conditions are met:

1. Age requirement: The apprentice is under 25 years old
2. Earnings threshold: The apprentice earns less than £50,270 per year
3. Written agreement: The apprenticeship is set out in a written agreement between:
   • The apprentice
   • The employer
   • The training provider

Required Agreement Details

The written agreement must clearly include:

• The type of apprenticeship framework or standard being followed
• The start date of the apprenticeship
• The expected completion date

Statutory Requirements

The apprenticeship must be approved for delivery on the Skills England website and meet the definition in Section A1 of the Apprenticeships, Skills, Children and Learning Act 2009, including:

• The person is employed and works for reward under an apprenticeship agreement
• It contains off-the-job training towards meeting the requirements of the approved standard
• It specifies the practical period and meets the statutory minimum duration (8 months for new starts from August 2025)

This clarity provides employers with confidence when planning Level 7 apprenticeship programmes under the fee pay route, knowing they can benefit from significant National Insurance savings.

Key Dates and Timeline

1 January 2026

• New Level 7 apprenticeship funding rules take effect
• Government funding limited to eligible age groups
• Fee pay route available for all other apprentices

31 March 2026 (Planned)

• Skills England aims to publish the new Level 7 standard

Q2 2026 (Planned)

• New Level 7 standard expected to go live for enrolments

Note: Apprentices who started before 1 January 2026 continue with government funding until completion.

Who Is Affected by These Changes?

Employers

If you're planning to offer Level 7 apprenticeships from January 2026, you'll need to:

• Assess whether your apprentices fall into the funded age groups
• Budget for commercial funding if using the fee pay route
• Ensure written agreements meet HMRC requirements for NI exemption
• Stay updated on the new standard's publication

Training Providers

Training providers delivering Level 7 apprenticeships should:

• Prepare for both government-funded and fee pay delivery models
• Establish clear pricing for fee pay arrangements
• Monitor announcements about the new Level 7 standard
• Ensure all documentation meets statutory requirements

Prospective Apprentices

If you're considering a Level 7 apprenticeship:

• Under 21 (or under 25 as a care leaver/with EHCP): You remain eligible for government funding
• Over 21: Your employer will need to fund commercially through the fee pay route
• Already started before January 2026: Your government funding continues to completion

Planning for Level 7 Apprenticeships After January 2026

To successfully navigate these changes, employers and training providers should:

1. Assess Your Current Pipeline

Review any apprentices due to start between now and January 2026. Starting before the deadline ensures government funding continues through completion.

2. Budget for Fee Pay Arrangements

Factor in the cost of commercially funding Level 7 apprenticeships for learners outside the funded age groups. Remember to account for the National Insurance exemption savings.

3. Prepare Written Agreements

Ensure your apprenticeship agreements include all required details to qualify for National Insurance exemptions:

• Specific apprenticeship standard
• Clear start and completion dates
• Signatures from all three parties

4. Monitor Standard Updates

Stay informed about the publication of the new Level 7 standard by:

• Following Skills England announcements
• Engaging with your training provider
• Joining relevant industry groups and networks

5. Review ROI and Strategy

Consider the return on investment for Level 7 apprenticeships under the new funding model, weighing:

• Development needs of your workforce
• Cost of fee pay route vs. alternative training
• National Insurance savings
• Long-term benefits of qualified professionals

Frequently Asked Questions

Can I still claim Apprenticeship Levy funds for Level 7 apprenticeships?

From January 2026, you can only use Levy funds (transitioning to Growth and Skills Levy) for Level 7 apprenticeships if your apprentice meets the age eligibility criteria (16-21, or under 25 for care leavers/those with EHCP). For other apprentices, you'll need to use the fee pay route with commercial funding.

What happens if my apprentice turns 22 during their Level 7 apprenticeship?

If your apprentice started their Level 7 apprenticeship while eligible for government funding (i.e., aged 16-21 at the start), they will continue to receive government funding through to completion, even if they turn 22 during the programme.

How much will Level 7 apprenticeships cost under the fee pay route?

The cost will be negotiated between employers and training providers. There is no set rate – it's a commercial arrangement. Costs will vary depending on the training provider, apprenticeship standard, duration, and other factors.

Will Level 7 apprenticeships still be quality-assured?

Yes, all Level 7 apprenticeships – whether government-funded or fee pay – must meet the same statutory requirements, be approved on the Skills England website, and include off-the-job training, end-point assessment, and meet minimum duration requirements.

Where can I find updates about the new Level 7 standard?

Monitor the Skills England website for official announcements. The Level 7 Trailblazer Group is working towards publication by 31st March 2026, with the standard going live for enrolments in Q2 2026.

Stay Informed About Level 7 Apprenticeship Funding

The landscape of Level 7 Apprenticeship Funding is changing significantly from January 2026. Whether you're an employer planning your workforce development strategy, a training provider preparing delivery models, or a prospective apprentice considering your options, understanding these changes is crucial.

Key takeaways:

• Government funding for Level 7 apprenticeships is being limited to young people and vulnerable groups
• The fee pay route provides a commercial funding alternative for all other apprentices
• National Insurance exemptions make the fee pay route more cost-effective for employers
• New standards are expected by March 2026, with enrolments from Q2 2026
• Apprentices already started before January 2026 are protected and continue to completion

We'll continue to monitor developments and provide updates as more information becomes available about the new Level 7 standard and its implementation.

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