Guidance

Post-16 National Insurance contributions grant methodology: April 2026 to March 2027

Updated 8 July 2026

Applies to England

Introduction

This guide explains how we will allocate the funding for post-16 provision for financial year 2026 to 2027.

To support institutions with the increase to employers’ National Insurance contributions (NICs) arising from their post-16 education from April 2025, we are providing up to £165.2 million in financial year 2026 to 2027.

What’s New

We are announcing an investment of around £120 million for colleges and other further education providers in financial year 2026 to 2027, rising to around £365 million in financial year 2027 to 2028. This funding will address immediate recruitment and retention needs, boosting opportunity for learners and driving skills for growth.

Part of this investment will be delivered by increasing components 2 and 3 of the Post-16 National Insurance contributions (NICs) grant for financial year 2026 to 2027. We have added additional steps to the calculation for components 2 and 3 to explain how this will be done. This will make available additional funding equivalent to just over 93% of the calculated figure for component 2 and component 3 of this grant.

To reflect the wider coverage of the NICs grant, this will be renamed the post-16 budget support grant (P16BSG) from April 2027.

Eligibility for the grant

Mainstream settings

The post-16 NICs grant will provide additional funding for the following mainstream settings that receive annual funding allocations from Department for Education (DfE) for the provision of post-16 education:

• maintained school and academy sixth forms
• 16 to 19 academies
• 16 to 19 schools
• further education (FE) colleges
• sixth-form colleges
• designated institutions (including the new designated institutions that form part of higher education provider group structures)
• local authorities

Paying the grant

We will pay the NICs grant for the period from April 2026 to March 2027. There will be one payment to cover the period. We expect to pay this in September 2026 (October 2026 for academies).

We will pay funding: 

• for maintained schools to local authorities, who will be required to pay it to individual schools at the allocated amount 
• at the allocated amount directly to all other settings

Allocation calculation

There are 3 components to the grant. You will only receive the components that apply to your situation.

Component 1: all settings delivering 16 to 19 provision

Step 1

We will calculate the total amount of income across all settings. We will use the total amount of 16 to 19 programme funding for academic year 2025 to 2026 funding allocations as of March 2026 as the income for this calculation.

Step 2

We will calculate your percentage share of the total income across all settings.

Step 3

We calculate your funding by applying the percentage share to the total amount of post-16 NICs funding for 16 to 19 delivery.

Step 4

Example

In table 1 there are 10 institutions, a total income amount of £100,000 and a total amount of funding of £250,000.

These figures are for representative purposes only to explain the calculation.

Table 1: illustrative calculation figures

Institution	Income received	Percentage of total income received (100/£100,000 multiplied by income received)	Grant allocation (£250,000 multiplied by percentage of total income received)
Institution A	£10,000	10	£25,000
Institution B	£15,000	15	£37,500
Institution C	£25,000	25	£62,500
Institution D	£3,000	3	£7,500
Institution E	£7,000	7	£17,500
Institution F	£5,000	5	£12,500
Institution G	£5,000	5	£12,500
Institution H	£8,000	8	£20,000
Institution I	£2,000	2	£5,000
Institution J	£20,000	20	£50,000
Totals	£100,000	100	£250,000

Component 2: colleges delivering non 16 to 19-year-old activity 

We will allocate funding to colleges based on how much they earned from delivering other eligible education and training to non 16 to 19 funded students and apprentices in proportion to their share of college income for these activities in 2024 to 2025.

Step 1

We will use the figure from your 2024 to 2025 financial statement to calculate the total amount of non 16 to 19-year-old income for colleges. For colleges that have not returned a 2024 to 2025 financial statements, we will use the 2024 to 2025 forecast.

This will include the following total income:

• 14 to 16 year olds in FE
• apprenticeship
• adult education and training
• higher education
• European funding
• skills bootcamps
• other income from provision of education and training, excluding income from bursaries - net income (5% admin fee, advanced learner loans bursary and free meals) and the teachers’ pension scheme employer contributions grant
• funding support

Step 2

We will calculate your percentage share of the total income across all settings.

Step 3

We calculate your funding by applying the percentage share to the amount of non 16 to 19-year-old and apprenticeship activity.

Step 4

We will add the additional funding made available by the July 2026 announcement, using the same percentage share.

Table 1: illustrative calculation figures shows an example of the calculation.

Component 3 - centrally employed teachers

The NICs grant will provide additional funding in respect of local authority centrally employed teachers (CETs) and centrally employed support staff.

Step 1

We used data collected on local authorities’ headcounts and salary costs of their CET and support staff usage in adult education over academic year 2023 to 2024 to calculate the NICs grant for 2025 to 2026. From this, we calculated a separate average salary for 6 staff categories. They are full-time and part time:

• centrally employed teachers

• centrally employed support staff

• contracted staff

Step 2

We used the average salary calculation to estimate the NICs costs for each of these categories and allocate funding to each local authority based on their estimated NICs cost.

Step 3

We uplifted funding to 2% of the local authority’s salary costs where the:

• estimated NICs cost for the staff category was less than 2% of the local authority’s salary bill for that category
• calculated average salary for the staff category was less than £9,100, resulting in an estimated NICs cost below the minimum threshold

Step 4

For financial year 2026 to 2027 we will uplift the calculated figure for financial year 2025 to 2026 by 1.66%, reflecting the average per student increase in funding.

Step 5

We will add the additional funding made available by the July 2026 announcement in proportion to the funding allocated in the earlier steps.

Calculating allocations without headcount and salary data

There are a small number of cases where we did not receive the data return shown in step 1 from local authorities. We had the headcount numbers from their 2022 to 2023 FE workforce census return.

In these cases, we used their headcount figures from their census return and applied the median salary costs for each category gathered through the data we collected from all other local authorities. After this, we will calculate their allocation following steps 2 ,3 and 4 detailed above.

Allocations

We have published the grant allocations for:

• components 1 and 2 at institution level
• component 3 at local authority level

We will update components 2 and 3 allocations by September.

Contact us

If you have any questions after reading this guidance, contact us via our customer help portal.