Apprenticeship Funding Rules 26/27: What the New £2,000 Incentive Means for Your Nursery
Early years apprenticeship funding is about to get more generous for nurseries and childcare settings across England. From 1 October 2026, non-levy paying employers can claim a brand new £2,000 hiring incentive on top of the 100% training funding already in place for apprentices aged 16 to 24. If you run a nursery, preschool or wraparound setting, here's what's changing and how to make the most of it.
A quick recap: what happened in August 2026
From 1 August 2026, the government began fully funding apprenticeship training and assessment costs for eligible apprentices aged 16 to 24 at non-levy paying settings. That covers most nurseries, which means you no longer contribute towards training costs for a young Early Years Educator or Early Years Practitioner apprentice.
This change removed one of the biggest barriers to recruiting new staff through an apprenticeship route. You also pay no employer National Insurance contributions on apprentices under 25 earning below £50,270. Together, these two changes lowered the cost of building your team considerably before the October changes even arrive.
What's new: the October 2026 hiring incentive
The next update to early years apprenticeship funding lands on 1 October 2026. Non-levy paying employers, typically small and medium-sized nurseries, will be able to claim a £2,000 hiring payment for every new apprentice they recruit aged 16 to 24.
A few conditions apply:
- The apprentice's practical training period must start on or after 1 October 2026.
- They must have joined your setting within the previous three months. So if their apprenticeship starts on 1 October, they need to have been employed by you since 1 July at the latest.
- Your training provider pays the money in two instalments, roughly at day 90 and day 365 of the apprenticeship.
This incentive sits on top of the funding you already receive. It isn't deducted from any apprenticeship service account and doesn't replace training funding: it's additional cash you can put towards uniforms, resources, travel costs or simply supporting a new starter through their first year.
How the funding stacks for early years employers
The £2,000 hiring incentive is one part of a wider package that reshapes early years apprenticeship funding for the year ahead. Depending on who you recruit, you may be able to combine it with other support:
- £1,000 additional payment for hiring an apprentice aged 16-18, or 19-24 if they have an Education, Health and Care Plan or are a care leaver. This has been running for some time and is paid in two instalments.
- £2,000 foundation apprenticeship incentive for apprentices aged 16 to 21 (or 22 to 24 for those with an EHCP, care leavers, or prison leavers), paid in three instalments as they progress.
- £3,000 Universal Credit hiring incentive, available since June 2026, for employers who take on an 18 to 24 year old who has been claiming Universal Credit for six months or more. This one comes directly to you rather than through a training provider.
Because these payments can combine depending on the apprentice's age and circumstances, some settings could see several thousand pounds of support for a single hire. Check the exact figures against your apprentice's individual circumstances before you budget for them, since eligibility rules vary case by case.
A worked example
Picture a nursery taking on a 17-year-old as a Level 2 Early Years Practitioner apprentice, who joined the staff team in August 2026. Training and assessment costs are fully funded. The setting pays no employer National Insurance on the apprentice's wages. It receives £1,000 for hiring a 16-18 year old. If the apprenticeship start date falls on or after 1 October and the apprentice has been employed for fewer than three months at that point, the setting also qualifies for the new £2,000 hiring incentive. That's meaningful support on top of a fully funded training pathway, and it shows why so many providers are now talking about early years apprenticeship funding as a genuine recruitment tool rather than just a training cost saving.
What early years settings need to do now
- Check your timing. The three month rule for the £2,000 incentive means planning ahead pays off. Bringing someone on as a new employee shortly before their apprenticeship start date could decide whether you qualify.
- Talk to your training provider early. Payments run through the provider in most cases, so they need accurate records of start dates and apprentice circumstances to release funds on schedule.
- Think about progression routes. With foundation apprenticeships also carrying incentive payments, this is a good moment to map out how you support a young person from their first role right through to a full Early Years Educator qualification.
- Keep an eye on the funding rules. Apprenticeship policy has moved quickly this year, and eligibility criteria can shift. Check the official government funding rules before you commit to a hire, and see our childcare funding page for wider support available to your setting.
- Loop in your finance team. Instalment payments arriving at day 90 and day 365 need to be tracked against your budget, particularly if you're combining several incentives for one apprentice. A simple spreadsheet noting start dates and expected payment dates saves confusion later.
Why this matters for the sector
Recruitment remains one of the toughest challenges nurseries face. Apprenticeships give you a way to grow your own staff, bring fresh energy into your setting and build loyalty from day one, while government funding covers training costs and now contributes towards the wider cost of employment too. For a sector under real financial pressure, that combination is hard to ignore.
Understanding early years apprenticeship funding properly, and timing your recruitment around it, can make a genuine difference to your staffing budget over the next twelve months. If you're thinking about recruiting an apprentice this autumn, now is the time to plan your approach and speak to a training provider who understands the sector.
Join the Conversation
Is the three-month timing rule for the £2,000 incentive going to change when you bring new starters on board? Let us know in the comments how you're planning around it!
How Parenta Can Help
Read more about all Government Incentives here. Timing a hire around these incentives is easier with the right training partner. Our early years apprenticeship training courses are designed around the funding rules above, so your new starter is enrolled and progressing from day one.
Want more updates like this as the rules develop? Head over to the Parenta blog for the latest funding and sector news.
Ready to Get Started?
Want to explore our early years apprenticeship training courses and see how the new funding could work for your setting? Get in touch with our friendly team today.
