Using your apprenticeship levy
As an employer with a pay bill of more than £3 million, you’re required to pay the apprenticeship levy. You can manage 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 you have in your account.
If you don’t have enough funds, you just pay 5% of the outstanding balance and the government will pay the rest. This is up to the funding band maximum allocated to each specific apprenticeship.
For apprentices that started before 1 April 2019, you need to contribute 10%.
If you exceed the funding band maximum, you’ll need to pay all the additional costs.
If you don’t already have an account, find out how to set up an apprenticeship service account as an employer.
Incentive payments for hiring a new apprentice
From 11 January 2022, employers can apply for a payment of £3,000 for new apprentices of any age who have an employment start date of 1 October 2021 to 31 January 2022. These apprentices must also have an apprenticeship start date of 1 October 2021 to 31 March 2022.
Applications open on 11 January 2022 and close on 15 May 2022.
For apprentices with an employment start date from 1 April 2021 to 30 September 2021, applications are now closed.
The incentive payment is in addition to the £1,000 employers already receive for hiring an apprentice:
- aged 16 to 18 years old
- aged 19 to 24 with an education, health and care plan or who has been in the care of their local authority
Hire an apprentice who has been made redundant
You can also use a new government service to help you hire apprentices who have been made redundant.
Many of these apprentices may already have the skills and knowledge you need. Hiring a new apprentice in this way could mean you have a work-ready apprentice who can quickly add value to your business, shortening the time you’ll see a return on your investment.
It also means you are supporting an apprentice to complete their training and achieve their apprenticeship.
If you hire an apprentice that has been made redundant, you can apply for incentive payments for hiring a new apprentice.
Paying your apprentice
You’re responsible for paying your apprentice for their normal working hours and any training they do as part of the apprenticeship.
You must pay them at least the National Minimum Wage rate depending on their age and the year of apprenticeship training they’re in.
The rates from April 2020 are:
|Apprentice||Under 19||19 to 20||21 to 24||25 and over|
|In 1st year||£4.15||£4.15||£4.15||£4.15|
|Have completed 1st year||£4.15||£6.45||£8.20||£8.72|
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
- on an approved UK government apprenticeship standard or framework (these can differ depending on country)
- earns less than £967 a week (£50,270 a year)
The apprentice, as an employee, will continue to pay Class 1 insurance contributions through their salary, this will only benefit the employer.
Read HMRC's guidance on paying National Insurance contributions.
Support small businesses by transferring your unused levy funds
You can use your apprenticeship service account to transfer up to 25% of your unused levy funds to a business of your choice.
By transferring levy funds you will be supporting other businesses in paying for their apprenticeship training and assessment costs (up to the funding band maximum).
When creating a pledge, you can select how much funding will be available for that financial year. You can also choose which businesses you’d like to support by selecting optional sector, skill or location criteria.
Once submitted, your pledge will be advertised on a public website so that businesses can search and apply for a transfer of funds.
You can also find businesses to support by:
- working with employers in your supply chain
- getting in touch with employers in your industry
- contacting an Apprenticeship Training Agency (ATA)
- working with regional partners
Transferring levy funds is a great way to help businesses and close the skills gaps in sectors and locations you want to support - creating more job and career development opportunities across England.