How Does The Level 7 Apprenticeship Funding Cut Impact Accounting Firms?
From January 2026 the UK government will withdraw funding for Level 7 Accountancy / Taxation apprenticeships for new starters aged 22 and older (which many firms rely on to train Chartered Accountants). Sixteen- to 21-year-olds (and existing L7 apprentices) remain funded.
This comes on top of rising employment costs, including recent increases in employer National Insurance contributions. Together, these changes significantly inflate the cost of hiring and developing in-house talent (especially small and mid-sized firms).
What Are The Implications for Accounting Firms?
Talent Pipeline Disruption and Hiring Model:
Without funding, firms may face higher costs for professional qualification training or may reduce hiring, especially for SMEs, while the Big 4 retain a scale advantage.
Increased Training Costs:
Losing government funding means employers must now cover more of the training costs for a chartered accountant directly (typically costs £20,000–£30,000 over 3 years).
Equity and Social Mobility Concerns:
Since the Apprenticeship Levy launched in 2017, school-leaver entries to accountancy have doubled (9,600 Level 7 starts in 2022/23, with 79% of ICAEW apprentices aged 24 or under.). ICAEW warns ending funding will shrink UK training roles and could reduce socioeconomic diversity.
Shift Toward Level 4 & 6 Apprenticeships:
Firms may pivot toward Level 4 (AAT) or Level 6 (degree) apprenticeships. However, these do not always offer a direct route to Chartered status, or they may require extra steps.
Pressure on Professional Bodies:
ICAEW, ACCA, and others will likely lobby hard to reverse or revise the decision. They may also explore alternative funding mechanisms or direct partnerships with firms to maintain entry routes.
What Should Your Accounting Firm Do?
Maximize Current Level 7 Enrollments Before January 2026
Front-load hiring of graduates or career-changers. Sign them onto L7 before 31 Dec 2025.
Adjust Your Hiring Strategy
Just a few questions to ask yourself:
- Do you still need every new team member to qualify in-house?
- Could you hire part-qualified staff and provide top-up training?
- Are there efficiencies in outsourcing parts of your training or restructuring team roles?
*Outsourcing momentum is accelerating: attracted by lower costs in the Philippines, South Africa and India, mid-tier firms have increased off-shored chargeable hours by 86% over the last three years, and ICAEW projects another 71% rise by 2028.
Explore Offshore Resourcing
Many firms are now blending their teams with qualified offshore professionals:
- Lower overheads without compromising quality
- More flexibility during busy periods
- Frees up UK teams to focus on client relationships and strategic work
Why Have Apprenticeships Been Cut?
Ministers say they are “re-balancing” the £3bn levy toward lower-level routes that have a bigger impact earlier on and help young domestic workers.
What The Profession is Saying
ICAEW: Wants 18-25 age band funded and a 12-month review of economic impact.
CIPFA: Warns that a 16-21 limit “skews recruitment toward school-leavers who need a longer pathway.”
Small-firm voice: Gavin Spencer (Beach Accountants) calls the cut “a nightmare” that will widen the skills gap just as HMRC rolls out Making Tax Digital.
Training providers (Kaplan, BPP): Encouraging employers to “enrol now, debate later” while funding still flows, and building blended paid-for options.
Apprenticeship Funding Cut Conclusion:
For many accounting firms, this is a triple hit:
- Loss of up to £21,000 in government funding per trainee
- Rising payroll taxes (e.g., 13.8% employer NICs)
- Upward wage pressure due to skills shortages
At a time when firms are focused on growth and retention, these mounting costs make it harder to invest in junior staff, maintain profitability, or scale sustainably.
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