Upcoming apprenticeship funding rule changes: What you need to know for 2025–26

The Department for Education has announced significant changes to apprenticeship funding rules for the 2025–26 academic year. At Paragon Skills, we’re committed to staying ahead of the curve so we can continue delivering outstanding support to our learners and employers. While most changes come into effect from 1st August 2025, it’s essential to plan ahead and understand what’s changing, and what’s staying the same, for new and continuing learners.

Here’s a round-up of the key changes and what they mean for us.

Minimum durations and Off-the-Job (OTJ) training:

What’s changing:

• Minimum duration for apprenticeships will reduce to 8 months.
• Minimum OTJ training hours will be set at 187 hours, regardless of Recognition of Prior Learning (RPL).
• The previous 20% rule for OTJ hours is being replaced with fixed minimum hours per standard, published by the DfE.

Implications:

• If a learner achieves early, they may miss out on certain incentives (e.g., care leaver bursaries and 16–18 incentives), which are only paid if the learner is still on programme on day 300 or 365.
• RPL can reduce OTJ hours and funding, but minimum thresholds (187 hours and 8 months) must still be met.

These updates mean more flexibility and clarity, but also require careful planning to ensure compliance and protect funding.

Supporting part-time learners equally

One of the most positive changes: we will no longer need to extend planned durations for learners working fewer than 30 hours per week. This ensures part-time learners can progress in line with their full-time peers, providing true parity and improving accessibility.

To manage this change:

• Bud will add a new question for employers to confirm that planned OTJ hours are realistic.
• We’re reviewing programme structures across Knovia Group to align with these changes.

Functional Skills: More choice for learners aged 19+

New rules confirm that learners aged 19+ can opt in or out of Functional Skills at enrolment, though the final decision rests with the employer. If learners opt in, they must complete the learning and sit the tests (though a pass is no longer required to complete the apprenticeship).

While BKSB Initial Assessment is no longer mandatory for learners opting out, we will continue using it across the group to assess readiness and support tailored learning journeys.

New IAG requirements for young learners

We now have a duty to provide Information, Advice, and Guidance (IAG) to 16–17 year olds at risk of becoming NEET (Not in Education, Employment or Training). We must also notify local authorities if a learner becomes NEET. Work is already underway across Knovia Group to develop robust processes and share best practice in this area.

Other key policy updates

• Apprenticeship agreements: These must be extended for any learner who continues past their planned end date.
• Residency and immigration:
  • EU pre-settled status will not expire, so eligibility remains if residency requirements are met.
  • Asylum seekers are only eligible under specific criteria due to uncertain immigration outcomes.
• Level 7 apprenticeships: From January 2026, funding will be restricted to 16–21 year olds (or up to 25 with an EHCP). Learners starting before this date remain eligible.
• Care leaver bursaries: Now confirmed to be tax-free and excluded from Universal Credit calculations.
• All future references to ESFA will now refer to the Department for Education (DfE).

The 2025–26 changes bring greater flexibility and clarity, but they also require careful coordination, updated processes, and increased vigilance. At Paragon Skills, we’re already preparing, updating our systems, training our teams, and refining our practices to ensure every learner continues to receive the highest standard of support.

We’ll be sharing further guidance and training in the lead-up to 1st August. In the meantime, if you have questions or want to understand how these changes may affect your team or learners, please speak to your line manager or contact our compliance team.

Together, we can continue to unlock brighter futures for every learner, whatever the funding landscape.

For more information about apprenticeships in your setting, visit our course pages here

Find out more about these changes on the Offical Government Website