Funding For Apprentices, How It Works: The Complete Guide

Among the first questions employers ask when considering hiring an apprentice is what it will cost and will they receive any financial help.  

Although apprenticeship training is, of course, an investment in your business or organisation, the money to fund it still must be found from somewhere.  

In Britain, it is up to employers to pay their apprentices' salaries. Funding towards the cost of apprenticeship training is available from the UK Government; the amount of money you receive will depend on whether or not you pay the Apprenticeship Levy.  

The levy is paid at a rate of 0.5% of the employer's annual pay bill.  It applies to those larger employers with a wages bill of more than £3 million every year.  It is also payable if you are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million. 

Paying the levy gives employers access to money that can be spent on apprentice training and assessment costs.  

Funding help for employers who do not pay the apprenticeship levy  

Only a small percentage of UK businesses - around 2% - currently have to pay the levy. Smaller employers whose annual pay bill is under £3 million a year have 95% of their apprentice training costs met by the UK government.  

To access this funding, employers must set up a payment schedule with the college or company delivering their training and pay them directly. To manage your funding and payments to your training provider, sign into the apprenticeships service account you created when you first hired your apprentice. www.gov.uk/sign-in-apprenticeship-service-account 

Apprentices' wage 

Employers must pay their apprentices at least the National Minimum Wage. The current minimum wage for an apprenticeship in the UK is £6.40 per hour. This applies to apprentices under the age of 19, or anyone in their first year of an apprenticeship. This hourly rate applies to time at work and time spent training in line with the apprenticeship. 

Apprentices have the same legal right to paid holiday, sick pay and workplace benefits as any other employee. Employers are not liable for employer national insurance contributions for apprentices aged under 25 when the apprentice earns up to £4,189 per month. 

Although only a tiny proportion of employers pay the apprenticeship levy, the system generates money which pays for other companies' apprenticeship training.  

Funding from the levy goes towards training apprentices who are studying for qualifications as stipulated in their approved apprenticeship training programme and which are needed to do their job effectively, such as a diploma or a degree. Levy-generated funds cannot be used to pay apprentices' salaries. 

In some instances, you might find you qualify for additional Government funding.  

The rules are regularly updated, and everyone's situation is slightly different, so to find out what financial assistance your business or organisation might be entitled to, check out the information on the UK Government's Apprenticeships website at www.apprenticeships.gov.uk/employers/funding-an-apprenticeship It contains lots of useful help and advice.  

The amount of apprenticeship funding providers can receive to deliver training depends on a variety of factors. Click below to learn more about the apprenticeship funding formula.