Retailers in England that do not pay the apprenticeship levy can receive £2,000 for each eligible young apprentice they hire under a new government hiring payment.
The Apprenticeship Hiring Payment applies when a non-levy-paying employer recruits an apprentice aged 16 to 24. Eligible apprenticeships must start on or after 1 October 2026.
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The British Independent Retailers Association (Bira) has highlighted the scheme to retailers. Employers do not need to make a separate application. Their apprenticeship training provider claims the payment and passes it on once the employer and apprentice have been confirmed as eligible.
Who can receive the £2,000?
The payment is aimed at employers that do not pay the apprenticeship levy, which typically includes small and medium-sized businesses.
The apprentice must be aged 16 to 24 when their apprenticeship training begins and must not have worked for the employer for more than 90 days before that date.
A 15-year-old can also qualify if their 16th birthday falls between the last Friday in June and 31 August.
The payment is for eligible new apprenticeships starting on or after 1 October 2026. It is an employer payment rather than funding for the apprentice’s wages or training.
Retailers can use the money towards employment-related costs, including equipment, travel and uniforms.
How the £2,000 is paid
The £2,000 is paid to eligible employers in two £1,000 instalments.
The first payment is due 90 days after the apprenticeship starts. The second is due after one year.
For apprenticeships lasting less than 12 months, the second payment is due after 242 days.
The apprentice must still be employed by the retailer when each payment becomes due. The training provider must pass the money to the employer within 30 working days of receiving it from the government.
The earliest payments under the new hiring incentive will be made from January 2027.
Training costs are separate
The £2,000 hiring payment should not be confused with government funding for apprenticeship training and assessment.
For eligible apprentices aged 16 to 24 starting from 1 August 2026, the government covers 100% of training and assessment costs for non-levy-paying employers, up to the relevant funding band maximum. Eligible 15-year-olds can also qualify.
This funding pays for the apprenticeship training and assessment. It is not an additional £2,000 cash payment to the retailer.
Employers must cover any agreed costs above the funding band maximum.
For other apprentices, non-levy-paying employers normally contribute 5% of training and assessment costs, with the government covering the remaining 95% up to the relevant funding band maximum.
A separate £1,000 payment
Some retailers may qualify for another employer payment of £1,000.
This is separate from the £2,000 Apprenticeship Hiring Payment and applies to certain apprentices aged 16 to 18, eligible 15-year-olds, and apprentices aged 19 to 24 who have an education, health and care plan or have been in care.
The £1,000 is paid in two £500 instalments. The first is due after 90 days and the second after one year. For apprenticeships lasting less than 12 months, the second payment is due after 242 days.
An employer can receive both the £2,000 hiring payment and this £1,000 payment if the employer and apprentice meet the eligibility requirements for both schemes.
Foundation apprenticeships have separate rules
Foundation apprenticeships have a separate employer incentive of up to £2,000.
This is not an additional £2,000 available for every young apprentice. It applies specifically to eligible foundation apprenticeships, including those in retail service, supply and administration.
The incentive covers apprentices aged 16 to 21, as well as those aged 22 to 24 who meet specified criteria, including having an education, health and care plan, having been in care, or being in or leaving prison.
The foundation apprenticeship incentive is paid in three instalments: £667 after 90 days, £667 after 242 days and £666 90 days after the apprentice progresses to their next apprenticeship.
The apprentice must remain employed at each payment point.
What retailers need to check
The different forms of apprenticeship support are separate and have different eligibility rules.
For a retailer hiring a qualifying 16- to 24-year-old apprentice under the main scheme, the key point is the £2,000 Apprenticeship Hiring Payment.
Some employers may also qualify for the separate £1,000 payment, while foundation apprenticeship employers may qualify for the separate foundation apprenticeship incentive. Training and assessment funding is another form of support and should not be counted as an additional cash payment.
Retailers considering an apprentice should check the eligibility and payment rules with their apprenticeship training provider or consult the government’s apprenticeship funding guidance.
