For most small and medium-sized businesses in England, AI training for staff aged 16 to 24 is completely free. The government pays 100% of the training and assessment for a Level 4 AI and Automation apprenticeship, worth up to £18,000 per person. For staff aged 25 and over, most employers pay just 5%, around £900.
This guide explains exactly how the funding works for apprenticeships starting between 1 August 2026 and 31 July 2027, so you know what your business would pay before you commit to anything.
What "funded" actually means
AI training funded through the apprenticeship system is a full, nationally recognised qualification, not a short online course. Your employee learns while they work, on real projects in your business, and finishes with an independent assessment.
The government sets a maximum funding amount for each apprenticeship, called the funding band. For the Level 4 AI and Automation Practitioner apprenticeship, the band is £18,000. Funding pays the approved training provider for the training and the end-point assessment. It does not cover the apprentice's wages, which you continue to pay as normal.
Who pays what in 2026/27
What your business pays depends on two things: the apprentice's age when they start, and whether you pay the Apprenticeship Levy.
|
Your business |
Apprentice aged 16–24 |
Apprentice aged 25+ |
|---|---|---|
|
Doesn't pay the levy (most SMEs) |
Government pays 100% |
Government pays 95%, you pay 5% (about £900) |
|
Pays the levy, with funds in your account |
Paid from your levy account |
Paid from your levy account |
|
Pays the levy, but your account has run out |
Government pays 100% |
Government pays 75%, you pay 25% |
The learner never pays anything, and there is no student loan.
Do I pay the Apprenticeship Levy?
Probably not. Only employers with an annual pay bill of more than £3 million pay the levy, which is 0.5% of their pay bill. If your total wages and salaries come to less than £3 million a year, you are a non-levy employer and the top row of the table applies to you.
Can I train staff I already employ?
Yes. Existing employees can do an apprenticeship, as long as the role genuinely involves the skills being taught and the training teaches them something new. For many businesses, the best candidate is someone who already knows your processes and wants to make them faster.
The new £2,000 hiring payment
From 1 October 2026, non-levy employers can receive up to £2,000 when they recruit a new employee aged 16 to 24 and start them on an apprenticeship. The apprentice must have started working for you no more than 90 days before their training begins. There's no application form; eligibility is checked automatically and the payment comes in two instalments through your training provider.
Put together, a new hire aged 16 to 24 at a non-levy employer can mean free training worth up to £18,000, a £2,000 payment and 0% employer National Insurance while they're an apprentice. (Our guide to employer NI on apprentices explains that last part.)
What does the employer still need to provide?
- Wages. The apprentice is your employee and is paid at least the relevant minimum wage.
- Learning time. Apprentices need protected time for training during working hours, agreed with the provider.
- A line manager. Someone who supports the apprentice and signs off their progress.
- A real role. The job must give them the chance to use what they learn. For AI and automation, that's any role involving admin, processes, customers or data.
How to check what your business would pay
Use our funding calculator to see the value of the training and your estimated cost in 30 seconds. Or request a free AI Opportunity Report: we'll research your business, show where AI could save your team time and confirm your funding position in writing before anything starts.
Quick answers
Is AI training free for small businesses? For apprentices aged 16 to 24 at employers that don't pay the levy, yes. The government funds 100% of training and assessment.
How much does it cost for an employee aged 25 or over? Usually 5% of the training cost for non-levy employers, about £900 for a Level 4 AI apprenticeship.
Does the funding apply in Scotland, Wales or Northern Ireland? No. These rules cover apprentices in England. The other nations run their own schemes.