Apprenticeship Funding Explained for Small Businesses
Apprenticeships are a great way to tackle skill shortages and fill vacancies in your business; helping you to upskill employees and introduce new faces and ideas. You can employ apprentices at different levels, ranging from intermediate level 2 courses all the way up to master’s degrees. Apprentices can be young people just starting out in their careers or those who want to change career direction completely. For SMEs the government fund 95% of the training costs associated with hiring an apprentice, as well as giving up to £4,000 in incentives.
1. How much do I pay?
Every apprenticeship has a funding band which outlines the cost of delivering that apprenticeship.
There are two levels of funding which determine how much you as an employer pay towards the cost of the apprenticeship
I am an employer with a pay bill of over £3 million each year. You will pay an apprenticeship levy. We have included more information about what the apprenticeship levy is and how you can use it to pay for apprenticeships here.
I am an employer with an annual pay bill of less than £3 million. The government help to fund 95% of the training cost of the apprenticeship in something called co-investment. You will be asked to cover 5% of the costs of the apprentice's training + the apprentice's wages.
If you have fewer than 50 employees and your apprentice is aged between 16-18 years old or 19-24 with an education, health and care plan (EHCP) the Government will cover the full cost of the apprenticeship (excluding wages). If your apprentice is over 18, you will need to pay 5% of the apprenticeship, with the Government contributing the other 95%.
This table will help you work out how much you need to pay:
Here's an example....
For example, the total cost of delivering the Level 3 Digital Marketing Apprenticeship is £11,000. If you qualify for the government co-investment, here's how much you would pay for this apprenticeship.
3. How do I access funding/Government incentives and when do I receive funding?
All of the apprenticeship funding and incentives are managed via the Government’s Digital Apprenticeship Service (DAS), also known as The Apprenticeship Service (TAS). As an employer you will need to register for an online account before you take on an apprentice. Details of how to set up your account can be found on their website: https://accounts.manage-apprenticeships.service.gov.uk/.
Your business will receive funding once you have recruited an apprentice and they have enrolled onto their apprenticeship with a training provider. Funding is paid via the DAS mentioned above.
4. How much do I need to pay an apprentice?
In their first year, apprentices must be paid a minimum of £5.28 per hour, many hiring employers pay more than this. After 12 months this increases to minimum wage for their age bracket. The current minimum wage rates can be found here: www.gov.uk/national-minimum-wage-rates.
WE ARE HERE TO HELP YOU...
Our team at WTPN run the West of England Apprenticeship Service. If you want support in understanding apprenticeships and how your business can benefit we offer a free, independent and impartial apprenticeship service for small businesses based in the West of England. Get in touch with our team to talk through your business' needs: firstname.lastname@example.org