What does an Apprenticeship Cost?

We frequently have conversations with employers who are thoroughly baffled by Apprenticeship funding, so understand the minefield here all too well.

The first thing to understand is the company's circumstance.  You are classed as a levy employer if your company has an annual wage bill of £3million or more, and you will automatically pay into the apprenticeship levy (0.5% of your total wage bill is deducted by HMRC).  If your wage bill sits under this threshold, you are classed as a non-levy employer.  You can find out more via the current government guidance. 

All funding for Apprenticeships, whether you pay into the levy or not, is managed via the Digital Apprenticeship Service (DAS).  This is a government portal through which funds are paid to your training provider, so you will need to register for an account

The secondary factor with Apprenticeship funding is the Apprentice's circumstances, specifically their age.  Currently, all Apprentices aged 21 or under at day 1 of their programme are entitled to full funding for Apprenticeships.  Those who are 22 or over on day 1 will trigger a 5% contribution from you as their employer, based on their total course fees.

Levy transfers

If you are a non levy employer, and the 5% contribution provides a barrier for you, your other option is to access a levy transfer.  This is essentially accessing the levy 'pot' of a larger employer who has more than they can spend, and can cover the fees for an Apprenticeship, provided it is applied for from the start of programme.  There are some limitations, and applications are granted at the discretion of the levy holder, so this is not a guarantee, but it can be a great option for many businesses.  If you are a levy employer who has run out of levy funds. you may also be able to access a transfer.

You can see the full guidance on levy transfers here.  We can give some guidance on this within the team, so do speak to your Business Partner if you want to investigate this.  You can also pledge for funding on the national portal here.

What does funding cover?

It is really important to note, as many of our smaller employers find the term 'fully funded' a little misleading, that wherever you access funding from, this only covers the training and assessment costs.  An Apprentice must be employed by you under PAYE, with a formal contract of employment, making their wages your responsibility.  You can find out more about employer responsibilities here.

Incentive payments

In addition to the funding for training and assessment, employers can also receive a £1,000 incentive payment to support apprentices in the workplace under certain conditions. This payment is available if, at the start of their apprenticeship, the apprentice is aged 16 to 18 (15 if their 16th birthday falls between the last Friday of June and 31 August). It is also available for apprentices aged 19 to 24 who have an education, health and care (EHC) plan, or those who have been in care.

This incentive can be used to cover various employment-related costs such as the apprentice's salary, travel expenses, or uniform, providing additional financial support to ensure a successful apprenticeship experience.

Industry specific incentives

In addition to general incentives, there are certain programmes that qualify or additional incentives with other industry bodies. CITB is a good example of this, where additional grants are available to their members for qualifying programmes.

You can also look at what support is available to employers