Funding apprenticeships
Overview
Apprenticeships offer a powerful pathway for individuals to gain hands-on experience while learning valuable skills—and for employers to build a skilled, future-ready workforce. But one common question remains, how are apprenticeships funded?
Funding apprenticeships
This page breaks down the funding models behind apprenticeships in a way that’s easy to understand. Whether you’re an employer considering taking on apprentices or someone looking to start an apprenticeship, this guide will walk you through who pays, how much support is available, and how different schemes work – from Government contributions to employer responsibilities, and from Levy funding to incentive payments – you’ll find everything you need to understand how apprenticeship funding works and how to access it effectively.
What is the Growth and Skills Levy?
The Growth and Skills Levy was introduction in April 2017 and applies to employers who have an annual salary bill of over £3 million. It was introduced to encourage employers to invest in the training and development of their workforce. Around 2% of employers fall in scope to pay the Levy and it’s charged at a rate of 0.5% of an employer’s salary bill. Each employer receives an annual allowance of £15,000 to offset against their Levy payment and the Levy is collected via the PAYE system on a monthly basis and paid into an online account.
The Growth and Skills Levy is administered through the Apprenticeship Service (AS) system which includes an online digital interface where employers can spend their Levy with a registered apprenticeship provider of their choice. Employers have two years from when funds enter their account to spend those same funds before they expire. The Levy can only be spent on apprenticeship programmes not on salaries.
What is Co-Investment?
Smaller employers with an annual salary bill of under £3 million are required to pay a contribution towards the cost of an apprenticeship training programme. Upon enrolment of the apprentice, you will need to pay 5% towards the cost of training your apprentice. The total cost will vary dependent on the funding band the apprenticeship programme is in. For this, we can agree a payment schedule and you will pay us directly for the training.
The government will pay the rest (95%) up to the funding band maximum. They will pay directly to us as your training provider.
From 1st April 2024,the Government committed to fully funding the apprenticeship costs for young people aged 16-21, meaning that SME employers, maybe like you, will no longer have to contribute to the cost of apprenticeship training for this age group.
Employer incentive
An employer incentive payment of £1,000 is available for new apprentices aged 16 to 18 and those under 25 with an Education Health Care plan.
