Thinking of taking on an apprentice — how does apprentice funding work for a small employer?

For a small employer, the funding picture is straightforward — you won’t be paying the levy, so the government picks up almost all of the training cost.

The apprenticeship levy is 0.5% of the annual pay bill, but it only applies to employers with a pay bill over £3m — and there’s a £15,000 levy allowance. So as a small employer, you won’t pay it.

Instead, as a non-levy employer:

• The government funds 95% of the apprentice’s training and assessment costs — you pay just 5% co-investment.
• You choose an approved training provider and agree a price for the apprenticeship standard.
• You manage it through the government’s apprenticeship service account, where you reserve funding and add the apprentice’s details.

A few practical points:

• The funding covers training and assessment only — you still pay the apprentice’s wages, which must be at least the apprentice minimum wage for their age.
• Employers with fewer than 50 employees get 100% funding for apprentices aged 16–18 (and some 19–24 year olds, such as care leavers) — worth checking whether that applies to you.
• The apprentice needs a proper employment contract and at least 20% off-the-job training.
• Pick your training provider carefully — quality varies, so check their Ofsted rating and completion rates before committing.

It’s a genuinely good deal for small employers: a trained employee for 5% of the training cost. Just make sure you have the time to mentor them properly — that’s where apprenticeships succeed or fail.