Apprentices are employees so you will be responsible for paying your apprentices’ wages.
Minimum wage for apprentices
A National Minimum Wage (NMW) for apprentices exists and applies to all apprentices aged under 19 and apprentices aged 19 or over in the first year of their apprenticeship.
The apprentice minimum wage can be found here and applies to time working and time spent training as part of the apprenticeship. Many employers pay above the national minimum wage.
Funding for businesses that don't pay the apprenticeship levy
What is the apprenticeship levy?
The apprenticeship levy is an amount paid at a rate of 0.5% of an employer’s annual pay bill if you:
- have an annual pay bill of more than £3 million
- are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million
You can benefit from this investment by training apprentices.
If you don't pay the apprenticeship levy:
Employers who do not pay the apprenticeship levy share the cost of training and assessing their apprentices with the government.
For new apprenticeships starting on or after 1st April 2019, you pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%) up to the funding band maximum.
For apprenticeships that started before 1st April 2019, you will pay 10% of the cost, with the government paying the rest (90%).
Have fewer than 50 employees?
If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged:
- 16 to 18
- 19 to 24 with an education, health and care plan provided by their local authority or has been in the care of their local authority
Additional payments for providing apprenticeships
Incentives for care leavers and employers
Employers could get £1,000 for taking on care leavers or people with an education, health and care plan (EHCP) as an apprentice. This payment is dependent on the apprentice giving their permission for the information about their care status to be shared with the employer. If this permission is not granted, the £1,000 payment will not be made.
Care leavers who start an apprenticeship can get a bursary of £3,000 for apprenticeships that began from August 1st 2023.
The bursary is paid by the Education and Skills Funding Agency (ESFA) to the apprenticeship training provider once the apprentice has been on the apprenticeship for at least 60 days, with the provider then passing the bursary onto the apprentice within 30 days of receiving it.
Further details on payments for providing apprenticeships
Employers will receive a payment of £1,000 if they take on an apprentice who, at the start of the apprenticeship, is:
- aged 16 to 18 (or 15 years of age if their 16th birthday is between the last Friday of June and 31st August.)
- aged 19 to 24 with an education, health and care plan provided by their local authority
- aged 19 to 24 and have been in the care of their local authority
Reserving funds for apprenticeships
Paying employer National Insurance contributions
Employers may not need to pay Class 1 National Insurance contributions for an apprentice, if the apprentice is under 25 years old and on an approved UK government apprenticeship standard or framework.
Read HMRC's guidance on paying National Insurance contributions.
How funding works if you pay the apprenticeship levy
If you pay the apprenticeship levy, you will need to work with your payroll department to understand how much apprenticeship levy you are due to pay each month and submit to HMRC through the PAYE process.
The amount of funding you will receive is calculated by factors including the levy you declare to HMRC, your pay bill, and a government top-up.
Can’t afford to take on an apprentice?
For those that would like to recruit an apprentice but can’t afford the costs involved, an Apprenticeship Training Agency (ATA) will hire an apprentice for you, place them with you and take care of payroll and tax. Learn more here >
Learn more about hiring an apprentice
Visit the Employers section of the government's apprenticeship website for more information on hiring apprentices.