Funding An Apprenticeship

Apprenticeships are an increasingly popular way to gain experience and learn new skills in the workplace. However, it can be daunting to consider funding an apprenticeship. With the right apprenticeship funding, a successful apprenticeship can provide individuals with valuable training and job opportunities, and businesses with a workforce that is rich in the crucial skills required to succeed. Fortunately, there are a range of apprenticeship funding options out there.

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How much does an apprentice cost

Apprenticeship costs can vary significantly depending on the scheme and training provider. You may be wondering: does the government pay for apprenticeships? Generally speaking, apprentices aged 16-18 will not have to pay any fees, as they are funded by the government’s Apprenticeship Levy. For those aged 19 or over, employers may be required to contribute towards funding an apprenticeship through paying course fees and travel expenses; this would depend on their company size and other factors. Additionally, some employers may offer bursaries or scholarships that can help with funding an apprenticeship and expenses related to completing the programme.

Who pays for an apprenticeship?

Whilst you might receive a grant for apprenticeships or find government funded apprenticeships through a government apprenticeship scheme, employers will still be responsible for paying the wage of your apprentice.

Do apprentices pay for their training?

For apprenticeships, employers and the government cover all costs associated (with the exception of travel costs, stationery costs etc). There are generally no apprenticeship costs paid by the apprentice.

Paying an apprentice

Employers need to make sure they are adhering to the applicable minimum wage laws and regulations when paying an apprentice, as well as considering whether the apprentice should receive additional compensation for their work.

When deciding on how much to pay apprentices, employers must consider a variety of factors such ­as the type of job being performed, the level of skill and expertise needed in that job role and the local market rate for similar jobs. In addition, if an apprentice is expected to complete vocational training courses or qualifications related to their chosen career path then this should also be taken into account when calculating wages.

Find out more about wages for apprentices here.

Paying employer National Insurance Contributions

Apprenticeship National Insurance Contribution (NIC) is a compulsory form of taxation paid by employers on behalf of their apprentices. It pays into the social security system and helps to fund benefits such as state pensions and unemployment insurance. The amount of Apprenticeship NIC depends on the apprentice’s age, wages, and other factors.

The Government introduced Apprenticeship NIC in 2017 to encourage more businesses to take on apprentices, with any employer that employs an apprentice aged between 16-24 years old eligible for payments from the government. Employers are expected to pay 13% of their apprentice’s wages­ into Apprenticeship NIC however this can be reduced if the employer is taking part in an approved Apprenticeship Scheme such as the ‘Apprentice Levy Scheme’ or ‘Incentive Payment Scheme’.

How are apprenticeships funded?

There are various ways that businesses can find assistance when it comes to paying for apprenticeship training and assessment fees. Funding an apprenticeship is often mistaken as a difficult process, but this is simply not the case. The most obvious source of help is the government’s Apprenticeship Levy scheme, paid into by larger businesses. But, how does the Apprenticeship Levy work?

What is the Apprenticeship Levy?

The Apprenticeship Levy is a tax introduced by the UK Government to help fund apprenticeships and skills training in England. It requires all employers with an annual payroll of over £3 million to pay 0.5% of their wage bill into the scheme, with a maximum allowance of £15,000 per year. The Levy was created to encourage businesses to invest in apprenticeships and traineeships, increasing the number of skilled workers in the country.

How does the Apprenticeship Levy work?

Money collected through the Levy is kept in a digital account called an ‘Apprenticeship Service Account’ which employers can use to pay for training and assessment costs for apprentices aged 16 or over. Employers are able to access additional funding depending on their size and sector, as well as receive discounts if they employ someone who is under 24 or care leaver status. For more apprenticeship FAQs, visit our page.

If you pay the levy

If you are an employer with a pay bill of more than £3 million, you are required to pay into the Apprenticeship Levy. You can manage these funds using the apprenticeship service and spend it on training and assessing your apprentices. The government will apply a 10% top up to the funds in your account.

If you don’t have enough funds, you can simply pay 5% of the outstanding balance and the government will pay the rest. This is up to the apprenticeship funding bands – there is a funding band maximum allocated to each specific apprenticeship. If you exceed the funding band maximum, you’ll need to pay all the additional costs.

You can also choose to use your apprenticeship service account to transfer up to 25% of your unused levy funds to a business of your choice. This will enable you to support other businesses in paying for their apprenticeship training and assessment costs (up to the funding band maximum).

If you do not need to pay the levy

If you are an employer that doesn’t pay into the Apprenticeship Levy, you will pay just 5% towards the cost of training and assessing an apprentice. The government will pay the rest up to the funding band maximum.

Where a business employs fewer than 50 people, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged:

  • 16-18
  • 19-24 with an education, health and care plan provided by their local authority or has been in the care of their local authority.

For funding for apprenticeships over 24, you will pay 5% and the rest will be covered by the government – or, you could seek a levy transfer from a bigger business. If you exceed the funding band, you will have to pay the additional costs.

How much does the government pay toward apprenticeships?

The UK government offers financial support in the form of apprenticeship grants and vouchers to encourage more employers to offer apprenticeship placements. These apprenticeship grants cover some or all of the cost involved in taking on and training an apprentice, not including their wages or National Insurance contributions.

 Small business apprenticeship funding

Small business apprenticeship funding has become a critical part of the current economy, and is increasingly being seen as an important vehicle for broader economic growth. New government initiatives are now making it easier than ever to obtain these crucial funds that help businesses train future generations of workers.

 Apprenticeship grants for employers

There are plenty of apprenticeship incentive grants aside from the levy and government apprenticeship scheme.

Apprenticeship incentives

The government operates a number of schemes to incentivise employers to hire young apprentices. Employers and training providers could get £1,000 each for taking on an apprentice who is either aged 16-18 years old, or aged 19-24 and has a history with care under one apprenticeship incentive grant.

Transfer your Apprenticeship Levy Funds

One of the easiest ways to use your funds is through transferring them directly to another employer or organisation that runs apprenticeships. You can also place them into a digital account, where they stay until spent on recognised training and assessment for apprentices which must be provided by organisations approved by the Government’s Register of Apprenticeship Training Providers (RoATP).

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