Apprenticeship units are the UK’s newest fully-funded training route — short, focused Level 5 programmes (30 to 140 guided learning hours) introduced under the Growth and Skills Levy. The employer guide on apprenticeship units covers what they are and who they’re for. This guide covers the bit nobody else has written about clearly: how the money actually moves.
If you’re a provider operations or MIS lead, this is your reference for getting paid on time. If you’re an employer L&D or finance lead, this is how to understand the cashflow and ask your provider the right questions.
Why This Matters
Most articles about apprenticeship units talk about totals: “each unit is funded at £750.” That’s true but it’s not the whole story. The funding is paid in two milestones, on specific triggers, only if specific data is recorded correctly in the ILR.
The single most common operational failure we see across the UK provider landscape: a unit is delivered to a learner, the cohort completes, the employer is happy — and the provider doesn’t get paid because LDM 403 was never added to the ILR record. The apprenticeship service literally doesn’t know the record is a unit, so no employer approval is requested, no milestone-one payment is generated, and nobody knows there’s a problem until someone reconciles the monthly SLD report.
“We have providers ringing us in their second quarter of unit delivery asking why nothing is showing up on the apprenticeship service. The answer is almost always the same thing: LDM 403 wasn’t added to the ILR. It’s a one-line fix that delays payment by months if you miss it on first submission.”
The End-to-End Payment Flow
Here’s what has to happen, in order, for both milestone payments to trigger.
1Provider sets up the ILR record on Funding Model 99
The provider creates the learner’s record in their ILR submission with Funding Model code 99. This identifies the funding route as the apprenticeship-unit-specific model under the Growth and Skills Levy. Without FM 99, the record won’t even be routed to the apprenticeship service.
2Provider adds LDM 403 to the same record
Learning Delivery Monitoring code 403 tells the apprenticeship service that this Funding Model 99 record is specifically an apprenticeship unit (not some other FM 99 use). Without LDM 403, the apprenticeship service does NOT pass the record into its system, employer approval is not requested, and no earnings are generated.
3Apprenticeship service notifies the employer for approval
Once the record arrives in the apprenticeship service with FM 99 + LDM 403, the system requests employer approval. The employer logs into their apprenticeship service account, sees the unit enrolment, and approves it. This step has to be complete before any milestone payment can be triggered.
4Provider delivers the unit. At 30% of delivery hours, they add LDM 404
Once the provider has delivered 30% of the unit’s total delivery hours (so 9 hours of a 30-hour unit, or 42 hours of a 140-hour unit), they record LDM 404 in the ILR. The apprenticeship service picks this up on the next ILR submission, double-checks employer approval is still active, and releases the 30% milestone one payment to the provider.
5Provider continues delivery to 100% + the learner takes the employer-validated skills test
The learner completes all remaining delivery hours. They sit the unit’s skills test (employer-validated, no formal EPA). The employer confirms the learner has passed.
6Provider records completion in the ILR — three fields together
To trigger the 70% milestone two payment, the provider must apply all three of these to the ILR record on the same submission:
- Actual end date applied (the date the learner finished)
- Completion status: 2 – completed
- Outcome status: 1 – achieved
Any one of these missing or wrong, and the apprenticeship service won’t recognise the record as complete. The 70% milestone two payment will not trigger.
7Apprenticeship service triggers the 70% milestone two payment
With all three completion fields recorded correctly and employer approval still in place, the apprenticeship service releases the remaining 70%. Payment shows up in the provider’s next monthly payment report on SLD (Submit Learner Data) and on the apprenticeship service view for employers.
The Payment Maths
What this looks like in cash terms, using the three new AI Leadership units as the worked example:
| Stage | What happens | Payment (per £750 unit) |
|---|---|---|
| ILR setup | FM 99 + LDM 403 added at enrolment | £0 (nothing paid yet, but it’s the trip-wire) |
| Employer approval | Employer approves on apprenticeship service | £0 (gate, not payment) |
| 30% delivery hours | Provider adds LDM 404 to ILR | £225 (30% milestone one) |
| 100% delivery + skills test + employer validation | Provider records actual end date + status 2 + outcome 1 | £525 (70% milestone two) |
| Total per learner per unit | If everything chains correctly | £750 |
Stacked across the three AI Leadership units (AU0009 + AU0010 + AU0011) for a single learner: £2,250 total, paid as £675 at the 30% milestones + £1,575 on the completion milestones.
For an SME (under £3m payroll) the apprenticeship is fully government-funded, so the employer pays £0 net — the payments flow directly from DfE to the provider via the apprenticeship service. For levy-paying employers, the same payments draw against the levy account on the apprenticeship service.
Where You See the Money
| Who | Where to look | What you’ll see |
|---|---|---|
| Provider operations / finance | Monthly payment report on SLD (Submit Learner Data) | Milestone-by-milestone payment events with reconciliation detail; what was earned, what was paid, when |
| Employer L&D / finance | Apprenticeship service for employers | Each apprentice’s record showing milestone payment events as they trigger; useful for cashflow forecasting on levy accounts |
| Provider apprenticeship service contact | Apprenticeship service provider view | Employer approval status, milestone triggers, and any blockers (e.g. failed payments, approval lapses) |
The Five Most Common Reasons Payments Don’t Trigger
- LDM 403 missing. The apprenticeship service never sees the record as a unit. No employer approval requested. No earnings ever generated. By far the most common cause — usually a first-time-unit-delivery mistake by providers new to FM 99.
- Employer approval lapsed or wasn’t completed before the trigger. Apprenticeship service won’t release the payment if the employer hasn’t approved (or has withdrawn approval) at the moment the milestone fires.
- LDM 404 not added at the 30% point. No LDM 404 = no 30% milestone one payment. Provider has to add it retrospectively on a later ILR submission.
- On completion, one of the three required fields wrong or missing. All three — actual end date, completion status 2, outcome status 1 — must be on the same submission. Missing any one and the 70% won’t trigger.
- ILR submission timing. The data must land in the right monthly submission window. Late or missed ILR returns mean delayed payments — not failed payments, but cashflow-disruptive.
How TESS Group Handles This
TESS Group is one of the first approved providers for the new AU0009 AI Strategy, AU0010 AI Adoption & Governance, and AU0011 AI Delivery & Transformation apprenticeship units (approved for delivery from 28 April 2026). Together they form the TESS AI Leadership Pathway. Our MIS / data team handles the full FM 99 + LDM 403 / 404 chain end-to-end as part of standard cohort onboarding — employers and learners don’t need to track the ILR plumbing themselves.
Funding model 99 applies only to apprenticeship UNITS
Worth clarifying: Funding Model 99 is the ILR code for apprenticeship units specifically. Full apprenticeship standards (the longer 15- to 24-month programmes) use different funding model codes and a different payment schedule.
If you’re evaluating whether to send your team on units or a full apprenticeship instead, the right comparison piece is apprenticeship units vs full apprenticeships. For an L4 practitioner role, the full apprenticeship route is the AI & Automation Specialist Level 4 (ST1512). For a deeper L6 engineering role, it’s the AI & Machine Learning Fellowship Level 6 (ST1398).
How TESS programmes map to apprenticeship units vs full apprenticeships
| What you want to train | TESS Programme | Funding model |
|---|---|---|
| Senior leaders — AI strategy capability | AU0009 AI Strategy Unit | FM 99 (apprenticeship unit) |
| Senior leaders — AI governance & procurement | AU0010 AI Adoption & Governance Unit | FM 99 (apprenticeship unit) |
| Senior leaders — AI delivery & transformation | AU0011 AI Delivery & Transformation Unit | FM 99 (apprenticeship unit) |
| Full AI leadership pathway (all three units) | AI Leadership Pathway | FM 99 (stacked across 3 units) |
| Mid-career practitioner — full apprenticeship | AI & Automation Specialist L4 | Different FM (not FM 99) |
| L4 in 8 months instead of 18 | AI & Automation L4 Accelerated | Different FM |
| Microsoft 365 / Copilot-focused L4 | AI Copilot Apprenticeship L4 | Different FM |
| Google Workspace / Gemini-focused L4 | AI Gemini Apprenticeship L4 | Different FM |
| L4 for operations / people leaders | AI for Operations Leaders L4 / AI for People Leaders L4 | Different FM (with embedded CMI L5) |
| Software engineers / data analysts — ML Engineer | AI & ML Fellowship L6 | Different FM (ST1398 L6) |
| Non-apprenticeship short rollout (not levy-funded) | AI for Leaders / Building AI-Ready Teams | Direct training spend (not FM 99) |
Not sure which fits? The programme finder takes two minutes; the L4 vs L6 comparison post goes deeper on full-apprenticeship choices; and the levy calculator shows what your existing levy will cover across both routes.
What TESS handles end-to-end on the ILR chain
For employers running our unit cohorts, here’s what we do on the funding side without you needing to track the codes:
What that looks like in practice:
- Pre-enrolment: the cohort plan we send you confirms FM 99 + LDM 403 will be applied on first ILR submission. We send a copy of the ILR confirmation to the employer’s nominated apprenticeship service contact.
- At enrolment: the apprenticeship service request for employer approval goes out. We’ll chase if approval doesn’t come back within 5 working days.
- At 30% delivery: LDM 404 added automatically against the cohort tracker, included in the next monthly ILR submission. Employer sees the milestone-one payment event on their apprenticeship service view.
- On completion: skills test marked passed and employer validation captured; actual end date + completion status 2 + outcome status 1 applied in the same ILR submission. 70% milestone two payment triggers on the next cycle.
- Reconciliation: we’ll send the employer a summary at the end of each unit confirming both milestone payments fired correctly.
“The technical funding guide is dense by design. Our job as a provider is to handle the ILR mechanics so the employer just sees the right numbers in their apprenticeship service view at the right time. If you’re evaluating providers for unit delivery, the right question isn’t ‘how much does it cost?’ — it’s ‘how do you handle the ILR submissions?’”
The Official Source
The authoritative reference is the gov.uk Apprenticeship Unit Technical Funding Guide. It’s written for providers and contains the full ILR specification, monitoring code definitions, and milestone-trigger logic. This guide is a plain-English summary of the parts that matter for cashflow; for definitive answers in edge cases, always check the gov.uk source.
Frequently Asked Questions
What is Funding Model 99?
Funding Model 99 is the ILR (Individualised Learner Record) funding model code used to identify apprenticeship units. It's how providers signal to the ESFA / apprenticeship service that a record is a short modular apprenticeship unit rather than a full apprenticeship standard. Without FM 99 plus LDM 403, no apprenticeship-unit-specific data flows to the apprenticeship service and no payments are triggered.
What is LDM 403 and why does it matter?
LDM 403 is the Learning Delivery Monitoring code that must be added to the ILR record to identify that a Funding Model 99 entry is specifically an apprenticeship unit. If a provider forgets to add LDM 403, the apprenticeship service won't recognise the record as a unit, no employer approval will be requested, and no earnings will be generated. It is the single most common cause of missed milestone-one payments.
What is LDM 404?
LDM 404 is the Learning Delivery Monitoring code recorded by the provider in the ILR once they have delivered 30% of the unit's delivery hours. Recording LDM 404 triggers the apprenticeship service to check the employer approval is still active and release the 30% milestone one payment. The payment then appears in the provider's monthly payment report on SLD and on the apprenticeship service view for employers.
How are apprenticeship unit payments split?
Apprenticeship unit funding is paid in two milestones: 30% at the LDM 404 trigger (30% delivery hours complete and recorded) and 70% on completion. So for an AI Leadership unit funded at £750, the provider receives £225 at the 30% milestone and £525 on completion.
What triggers the 70% milestone two payment?
Three things, all in the ILR: the actual end date applied; completion status set to '2 – completed'; and outcome status set to '1 – achieved.' This signals that the apprentice has finished 100% of delivery hours and passed the employer-validated skills test. The apprenticeship service double-checks employer approval is still in place, then releases the remaining 70%.
Where can the employer see the payments?
Employers can see milestone payment events on the apprenticeship service under the relevant apprentice's record. Providers see the same payments — plus the timing and reconciliation detail — in their monthly payment report on SLD (Submit Learner Data).
Why might a milestone payment fail to trigger?
Five common causes: (1) LDM 403 missing — apprenticeship service didn't recognise the record as a unit; (2) employer approval lapsed or wasn't completed before the trigger; (3) LDM 404 not added at the 30% point; (4) on completion, one of the three required fields wrong (actual end date / completion status / outcome status); (5) ILR submission timing — the data must be in the right monthly submission window.
Does this apply to all apprenticeship units, or just AI ones?
All apprenticeship units delivered under Funding Model 99, regardless of subject. The same FM 99 + LDM 403 + LDM 404 + completion status chain applies to AI Leadership units, the new AI Adoption & Governance and AI Strategy units, and any future apprenticeship units approved by Skills England under the Growth and Skills Levy.
Considering unit delivery and want a provider that handles the ILR mechanics?
TESS Group is one of the first approved providers for the three new AI Leadership units. Our MIS team handles FM 99, LDM 403 / 404 and milestone reconciliation end-to-end — you see the right numbers in your apprenticeship service view at the right time.
Book a Free Discovery CallRelated Reading
The conceptual primer AU0009 / AU0010 / AU0011 Guide
The three new AI Leadership units explained Which AI Leadership Unit Should You Pick?
Decision framework for senior leaders TESS AI Leadership Pathway
The full programme page Units vs Full Apprenticeships
Side-by-side comparison L4 vs L6 Apprenticeship Comparison
If you’re between units and full apprenticeships 15-Question Fit Assessment
Which apprenticeship route fits you / your team Apprenticeship Levy Calculator< br>See what your levy will cover Programme Finder
2-minute tailored recommendation