Government Wage Subsidies In The UK: Employer Support In 2026

In 2026, one of the main government wage subsidies available to employers in Great Britain is the Youth Jobs Grant, which offers up to £3,000 for each eligible 18 to 24-year-old recruited.

The Jobs Guarantee provides another route into employment for eligible 18 to 24-year-olds who have been claiming Universal Credit and looking for work for 18 months. Under the programme, the government funds up to 25 hours of paid employment a week for six months.

Employers can also receive apprenticeship-related support, including a £1,000 additional payment for certain young apprentices, up to £2,000 for eligible foundation apprenticeships and, from 1 October 2026, a £2,000 hiring payment for qualifying non-levy employers taking on new apprentices aged 16 to 24.

Scheme Or Incentive	Potential Employer Support	Main Target Group
Youth Jobs Grant	Up To £3,000	Eligible 18 To 24-Year-Olds On Universal Credit
Jobs Guarantee	Government-Funded Employment Costs	Eligible 18 To 24-Year-Old Long-Term UC Claimants
Young Apprentice Additional Payment	£1,000	Certain Apprentices Aged 16 To 24
Foundation Apprenticeship Incentive	Up To £2,000	Eligible Foundation Apprentices
Apprenticeship Hiring Payment	Up To £2,000	Eligible New Apprentices Aged 16 To 24

The schemes have different eligibility rules, so businesses should not assume that receiving one type of employment support automatically makes them eligible for another.

Last Updated: 08.09.2026

What Are Government Wage Subsidies?

Government wage subsidies are financial incentives designed to reduce some of the cost of employing particular groups of workers.

Rather than the government simply providing income directly to an individual, an employment subsidy can encourage businesses to create jobs or recruit workers by sharing part of the financial risk.

Government wage support can take several forms, including:

• Hiring Grants: Fixed payments made after an eligible worker is recruited
• Wage Funding: Government support covering some or all eligible wage costs for a set period
• Apprenticeship Incentives: Payments for recruiting or supporting eligible apprentices
• Training Support: Government contributions towards the cost of developing employees’ skills
• Employer Tax Relief: Reduced employment costs through measures such as qualifying National Insurance relief

The aim is usually not to subsidise a position permanently. Instead, support is intended to help a person enter employment, gain experience and develop skills that can lead to sustainable work.

This distinction matters because not every government business grant is a wage subsidy. General investment grants, research funding and business loans serve different purposes and should not be confused with employment incentives.

The Journey Of Government Wage Subsidies In The UK

Government-supported employment programmes have changed significantly over the years as policymakers have responded to recessions, youth unemployment and changes in the labour market.

One earlier example was the Future Jobs Fund, introduced in October 2009 following the financial crisis.

It primarily supported subsidised jobs for unemployed 18 to 24-year-olds who had been out of work for six months or more. Official government analysis recorded more than 105,000 jobs created between October 2009 and March 2011.

A decade later, the economic disruption caused by the COVID-19 pandemic led to another major employment programme.

The Kickstart Scheme was introduced in 2020 and provided funding for employers to create jobs for 16 to 24-year-olds receiving Universal Credit and considered at risk of long-term unemployment.

Kickstart was considerably more generous than a simple hiring grant.

Funding could cover 100% of the relevant minimum wage for 25 hours per week for six months, together with associated employer National Insurance contributions and minimum automatic-enrolment pension contributions.

Employers could also receive £1,500 per placement for setup and employability support.

Applications eventually closed in December 2021 and the programme has now ended. The emphasis has since shifted again.

Rather than relying on one broad programme, the current approach combines targeted hiring incentives, apprenticeship support and more intensive help for young people who have remained unemployed for longer periods.

The Youth Jobs Grant and Jobs Guarantee illustrate this change.

One provides employers with a fixed payment to encourage recruitment before unemployment becomes deeply entrenched, while the other offers substantially greater intervention for young people who have been looking for work for a much longer period.

What Government Wage Subsidies And Hiring Incentives Are Available In 2026?

Several forms of employment support are particularly relevant to businesses in 2026.

Youth Jobs Grant

The Youth Jobs Grant opened on 30 June 2026 and operates across England, Scotland and Wales.

Employers can receive up to £3,000 for each qualifying job when they recruit an eligible person aged 18 to 24 who has been receiving Universal Credit and out of work for at least six months.

Businesses of different sizes can participate. Sole traders intending to employ staff can also apply, although employers must satisfy the scheme’s eligibility and due-diligence requirements.

Jobs Guarantee

The Jobs Guarantee is aimed at young people who have been unable to move into sustained employment despite receiving earlier support.

It provides eligible 18 to 24-year-olds who have been claiming Universal Credit and looking for work for 18 months with a route into paid employment.

The government funds up to 25 hours of paid work per week for six months. The first participants began work in 2026, and the government has said more than 90,000 funded jobs are expected to be created by 2029.

Apprenticeship Hiring Incentives

Government support is also available when businesses recruit qualifying apprentices.

Employers can currently receive £1,000 for an eligible apprentice who is aged 16 to 18 or, in certain circumstances, aged 19 to 24 and has an education, health and care plan or care experience.

Eligible foundation apprenticeships can attract an employer incentive of up to £2,000.

From 1 October 2026, qualifying employers that do not pay the apprenticeship levy may also receive a hiring payment of up to £2,000 when they recruit a new apprentice aged 16 to 24.

These apprenticeship payments are not identical to traditional wage subsidies, but they can substantially reduce the overall cost of recruiting and developing younger workers.

How Does The £3,000 Youth Jobs Grant Work?

For many small employers, the Youth Jobs Grant is currently one of the most straightforward examples of a government hiring subsidy.

The scheme is designed around a simple principle. An employer creates a genuine vacancy, recruits an eligible young person and receives financial support when the employment and earnings conditions are satisfied.

Who Is Eligible?

The employee must generally:

• Be Aged 18 To 24
• Have Been Receiving Universal Credit
• Have Been Out Of Work For At Least Six Months
• Meet The Relevant Scheme Requirements

Employers must also satisfy eligibility checks.

Current guidance says employers must operate in Great Britain, have been trading for at least six months before registering a vacancy, have the relevant HMRC registration and have a PAYE scheme.

What Jobs Qualify?

A business cannot create an artificial or token position purely to obtain the payment.

An eligible position must:

• Provide At Least 25 Hours Of Paid Work Per Week
• Be Expected To Last At Least Four Months
• Pay At Least The Applicable Minimum Wage
• Represent Genuine Paid Employment
• Not Replace An Existing Employee, Worker, Apprentice Or Contractor
• Be Lawful, Safe And Suitable

The grant remains £3,000 even where an employer offers more than 25 hours a week or pays above the minimum wage.

Minimum wage compliance is particularly important. From 1 April 2026, the National Living Wage for workers aged 21 and over is £12.71 per hour, while the rate for workers aged 18 to 20 is £10.85 per hour.

How And When Are Employers Paid?

The £3,000 payment is made in two stages:

• £1,800 After Six Weeks
• £1,200 After 18 Weeks

The Department for Work and Pensions verifies employment and earnings through HMRC Real Time Information before payments are released.

This makes accurate PAYE reporting important. Alternative evidence of earnings is not accepted in place of the HMRC RTI records used by the scheme.

Youth Jobs Grant Vs Jobs Guarantee

Although the programmes are part of the wider effort to tackle youth unemployment, they target different stages of unemployment.

Feature	Youth Jobs Grant	Jobs Guarantee
Age Group	18 To 24	18 To 24
Typical UC And Workless Period	At Least 6 Months	18 Months
Employer Support	£3,000 Grant	Eligible Employment Costs Funded
Working Hours	Minimum 25 Hours Per Week	Up To 25 Funded Hours Per Week
Main Purpose	Encourage Employers To Recruit	Move Long-Term Unemployed Young People Into Work

The Youth Jobs Grant is essentially an incentive to make an eligible hire. The employer remains responsible for the ordinary costs of employment beyond the £3,000 grant.

The Jobs Guarantee represents a stronger intervention because the government funds eligible paid employment for six months.

For employers, this distinction is important when assessing recruitment costs. It also demonstrates why government wage subsidies should not be treated as a single type of programme.

How Much Can Wage Subsidies Reduce Hiring Costs?

The financial effect depends on the scheme, employee, working hours, pay and additional employment costs.

Consider a simplified example.

A business recruits an eligible employee through the Youth Jobs Grant and expects to incur £10,000 of gross wages during the relevant initial employment period.

Cost	Amount
Illustrative Gross Wage Cost	£10,000
Youth Jobs Grant	-£3,000
Remaining Gross Wage Cost	£7,000

In this simplified example, the £3,000 grant offsets 30% of the gross wage figure.

However, this should not be interpreted as the government’s standard contribution rate. Actual savings differ considerably between jobs.

Employers must still budget for other costs that may apply, including:

• Employer National Insurance
• Workplace Pension Contributions
• Holiday Pay
• Equipment
• Training
• Insurance
• Recruitment And Onboarding
• Any Salary Above The Minimum Required Level

A wage subsidy should therefore support a recruitment decision rather than replace normal workforce budgeting.

How Can Employers Apply For Government Wage Support?

The exact process depends on the programme, but the Youth Jobs Grant provides a useful example of how current employment subsidies operate.

1. Check Eligibility

Confirm that the business satisfies the employer requirements and that the proposed job meets the scheme conditions.

2. Submit An Employer Application

Youth Jobs Grant applications are made through the government’s Find a Grant service.

The Department for Work and Pensions then carries out eligibility and due-diligence checks.

3. Register The Vacancy

Once an employer has been approved, qualifying vacancies can be submitted.

Employers will usually only need to complete the main application once and may then be able to submit additional eligible vacancies without completing the entire process again.

4. Recruit An Eligible Candidate

The young person must satisfy the programme’s eligibility rules.

The employer should still conduct a proper recruitment process and assess whether the candidate is suitable for the role.

5. Put The Employee Through PAYE

Employment and earnings must be reported correctly.

For the Youth Jobs Grant, DWP uses HMRC Real Time Information to confirm that the relevant conditions have been satisfied.

6. Receive The Grant

Where the conditions are met, payments are made in stages rather than as one upfront lump sum.

Businesses should therefore avoid relying on the grant to fund wages before the payment conditions have been reached.

What Responsibilities Do Employers Have?

Receiving government funding does not remove an employer’s ordinary legal responsibilities.

Businesses remain responsible for treating subsidised employees in the same lawful and professional manner as other workers.

Important responsibilities include:

• Paying The Correct Minimum Wage: Employees must receive at least the legal rate applying to them
• Operating PAYE Correctly: Wages and deductions must be properly reported
• Providing Genuine Employment: Jobs should have a real business purpose
• Following Employment Law: Subsidised employees still have relevant statutory employment rights
• Maintaining A Safe Workplace: Employers remain responsible for health and safety
• Avoiding Displacement: Businesses should not remove existing workers simply to replace them with subsidised recruits
• Keeping Accurate Records: Payroll and employment information should support any scheme checks
• Following Grant Conditions: Businesses should comply with the particular rules attached to the funding

For the Youth Jobs Grant, the government also carries out checks covering areas such as HMRC registration, insurance, employment obligations, compliance history and health and safety.

Do Government Wage Subsidies Actually Work?

Wage subsidies can help businesses overcome some of the perceived risk involved in recruiting people who have been outside employment for an extended period.

For employers, the financial support can make it easier to justify creating an additional position, investing in training or giving an inexperienced candidate an opportunity.

For workers, subsidised employment can provide:

• Recent Work Experience
• Workplace Skills
• References
• Greater Confidence
• Professional Networks
• A Route Into Permanent Employment

The need for this support remains significant.

The Office for National Statistics estimated that 981,000 people aged 16 to 24 in the UK were not in education, employment or training between April and June 2026. That represented 13.0% of people in this age group.

However, paying employers is not enough on its own.

Wage subsidy programmes are more likely to create lasting value where participants receive meaningful work, training and opportunities to progress beyond the subsidised period.

For businesses, this means treating the subsidy as support for developing a potentially valuable employee rather than simply viewing the worker as temporary low-cost labour.

What Are The Main Risks Of Wage Subsidy Programmes?

Government wage subsidies can improve employment opportunities, but poorly designed programmes can also produce unintended effects.

Deadweight

Deadweight occurs when public money is used to subsidise a job that would have been created anyway.

For example, if a business had already planned to recruit an employee and would have selected the same individual without government assistance, some of the subsidy may not have produced additional employment.

Displacement

Displacement occurs where subsidised employment replaces another worker or job opportunity instead of genuinely increasing employment.

Current Youth Jobs Grant rules specifically state that qualifying jobs must not displace existing employees, workers, apprentices or contractors.

Short-Term Employment

A subsidised job may end as soon as government support finishes.

The long-term value of a programme therefore depends partly on whether participants gain skills and experience that improve their employment prospects after the subsidy ends.

This is also why employers should consider whether there is a realistic business case for retaining the employee rather than concentrating only on the short-term grant.

Which UK Wage Subsidy Schemes Have Closed?

Older employment programmes frequently continue to appear in online articles long after applications have ended.

Businesses researching government wage subsidies should therefore check the current status of a programme before making hiring decisions.

Scheme	Current Position
Youth Jobs Grant	Open In 2026
Jobs Guarantee	Being Delivered In 2026
Apprenticeship Hiring Payment	Starts 1 October 2026
Kickstart Scheme	Closed
Future Jobs Fund	Historic Scheme

The Kickstart Scheme is one of the most important examples. Applications closed in December 2021 and the final deadline for young people to begin Kickstart jobs was in March 2022. It should therefore not be presented as a current funding option.

The Future Jobs Fund is also a historical programme rather than funding that businesses can apply for today.

Employers should always check the current eligibility rules because government employment policies can change, funding can be limited and individual schemes can eventually close to new participants.

Conclusion

Government wage subsidies continue to play an important role in connecting businesses that need workers with people who may face barriers to employment.

The system has evolved considerably from the Future Jobs Fund and Kickstart Scheme.

In 2026, the focus is increasingly on targeted support such as the £3,000 Youth Jobs Grant, the Jobs Guarantee and incentives designed to increase apprenticeship opportunities for younger people.

For small businesses, the potential benefit is straightforward. Government support can reduce some of the financial risk involved in recruitment and make it easier to give an eligible candidate an opportunity.

However, a subsidy should not be the only reason for making a hire. Employers still need a genuine role, a realistic workforce requirement and enough funding to cover wages and employment costs once government support is taken into account.

Businesses that combine financial assistance with training, proper onboarding and longer-term development are more likely to turn a government-supported hire into sustainable employment.

Frequently Asked Questions

What Are Government Wage Subsidies?

Government wage subsidies are financial measures that reduce some of the cost or risk of employing eligible workers. They can include wage funding, hiring grants and related employment incentives.

What Government Wage Subsidies Are Available In The UK?

Current support includes the Youth Jobs Grant and Jobs Guarantee, alongside apprenticeship incentives. Eligibility and availability vary between schemes and different parts of the UK.

How Much Is The Youth Jobs Grant?

Eligible employers can receive up to £3,000 for each qualifying employee, consisting of £1,800 after six weeks and £1,200 after 18 weeks when the scheme conditions are met.

Can Small Businesses Claim Government Wage Subsidies?

Yes. Businesses of different sizes can qualify for certain schemes. The Youth Jobs Grant specifically allows organisations of any size to apply, including sole traders intending to employ staff, subject to eligibility requirements.

Can Employers Combine Wage Subsidies With Apprenticeship Incentives?

In some circumstances, yes. Current government apprenticeship guidance indicates that more than one qualifying employer payment can be available where the relevant conditions for each are satisfied.

Do Employers Have To Repay Wage Subsidies?

Legitimate payments received after meeting all scheme conditions are generally grants rather than ordinary business loans.

However, funding may be withheld or recovered where grant conditions are breached, so employers should check the specific terms before participating.

Are Government Wage Subsidies Available Across The Whole UK?

It depends on the programme. The Youth Jobs Grant operates across England, Scotland and Wales, while apprenticeship funding arrangements and other employment programmes can differ between the four UK nations.