Apprenticeships offer great value when it comes to recruiting and training amazing employees. On this page, we'll take you through everything you need to know about the cost of apprenticeships and the different funding routes open to employers.
The costs of apprenticeship training for employers can vary depending on the programme you choose and the size of your business.
Employers will also need to budget for other costs, just like with any other employee: wages, relevant expenses, recruitment fees (if applicable) and any additional training they may need outside of their apprenticeship programme. For learners, apprenticeship training costs nothing at all.
An apprenticeship is an investment – and employers often reap significant rewards. When all costs are accounted for, the average apprentice will generate a net benefit of £2,496 during their training period.
The Apprenticeship Levy is a ringfenced fund for large employers intended to encourage investment in apprenticeship training. If your organisation has an annual salary bill of over £3 million, you will pay into an Apprenticeship Levy fund.
Employers who pay the levy contribute 0.5% of their salary bill. The Apprenticeship Levy can be used to pay for training costs of new apprentices, or to enrol existing staff on professional development apprenticeships.
If your business has a salary bill of less than £3 million, you will not contribute to the Apprenticeship Levy. Instead, you will be able to claim government co-investment towards the costs of apprenticeship training.
As an employer, you will pay only 5% of your apprentice’s training and assessment fees, while the Government contribute 95%.
If you have less than 50 employees and your new apprentice is aged between 16-18, the government will waive the 5% contribution, covering 100% of training costs.
Apprenticeships in England are funded through two primary routes: The Apprenticeship Levy and Government Co-Investment. The Apprenticeship Levy applies to large organisations, while Co-investment is available to SMEs.
Alongside these funding mechanisms, there are also a range of apprenticeship grants for employers who meet certain conditions.
For more information on grants, check out our section below.
The majority of apprenticeship funding is administered via the digital Apprenticeship Service. This is a government-operated system where employers can register apprentices, apply for national funding schemes, and search for other employers with Levy Funds to share.
Many local councils or combined Authorities also offer grants for hiring apprentices, or run their own levy transfer schemes.
In addition to the Apprenticeship Levy and co-investment support, there are a range of additional grants for employers taking on an apprentice.
Additional funding of £1000 is currently available to employers hiring an apprentice aged between 16-18.
Additional funding can also include grant schemes set up by local authorities.
Another funding option is a Levy Transfer. This is where businesses can claim their co-investment fee from a larger organisation with levy funds to spare. The digital Apprenticeship Service has recently introduced this functionality, making it easier than ever for employers to connect and transfer funding.
If you are taking on an apprentice who has previously been in care, there are some additional funds to be aware of.
Care leavers who go onto an apprenticeship programme could be eligible to receive a bursary of £1000.
Employers could also claim additional funding of £1000 if an apprentice is aged between 19 and 24 years old and has either an Education, Health and Care (EHC) plan, or has been in the care of their local authority.
If you have any questions about apprenticeship funding or costs for your organisation, please get in touch with our friendly team. We'd be happy to help.