Funding your apprenticeship training depends on the size of the employer. All employers with an annual pay bill of £3m and higher pay into the Apprenticeship Levy, which provides access to training funds for apprentices. This accounts for just 2% of employers in England. These employers are able to transfer up to 25% of their levy to any other employer, which will fund the full cost of training for the receiving employer’s apprenticeship training. Read more about apprenticeship funding.
98% of employers in England do not pay into the apprenticeship levy as their annual pay bill is less than £3m. These employers are commonly called non-levy payers, and they can access apprenticeship funding under a scheme known as co-investment. Employers contribute 5% of the cost of the training over the duration of the apprenticeship, with the government paying the rest of the costs.
In addition, if you are a small employer with less than 50 staff, the training costs are funded by the Government for under 18’s and 19-24 year olds who are care leavers or with special educational needs
The apprenticeship levy cannot be used to pay for apprentices salaries, and the full employment costs must be paid by the apprentices’ employer, regardless of its size.
Employers are eligible for a £1,000 grant to employ an apprentice aged 16-18, or a 19-24 year old who has been in care, or has special educational needs.
A Covid-19 recovery incentive was announced in the March 2021 budget. Between 1 April and 30 September 2021, any employer taking on a new hire apprentice of any age or at any level is eligible for a £3,000 grant as an incentive to rebuild the economy post Covid-19. This scheme has been extended to cover any new hire apprentices employed between 1 October 2021 and 30 January 2022. From 11 January 2022, you will be able to apply for a payment of £3,000 for apprentices with an employment start date from 1 October 2021 to 31 January 2022. Applications close on 15 May 2022.
As part of your application to join the Hackney Apprenticeship Network, you have the opportunity to apply to receive levy funding via a transfer from Hackney Council to cover training costs for your apprentices or existing staff, All transfers are subject to the government rules being met.
Apprenticeship Levy Funding Rules for all employers:
All Apprenticeship levy funding is subject to eligibility checks. There are two considerations – eligibility for the funding, and eligibility that we have put into place through the Hackney Apprenticeship network for funding from Hackney Council.
National Funding criteria for apprenticeships:
- Funds can only be used to pay apprenticeship training and assessment costs for training delivered by an approved apprenticeship provider. Salary or other associated costs cannot be covered by this funding.
- The levy will only pay for new learning, which means that before accepting a candidate onto an apprenticeship, the training provider will need to check prior learning and experience, and offer credits where appropriate – reducing both the cost and the duration of the apprenticeship. However, the apprenticeship must still be a minimum of 1 year.
- Learners must be directly employed by your business and paid through your PAYE scheme.
- Funding can only be used for new qualification starts. Funds cannot be used for any qualifications which have already started.
- Funds will be paid monthly for the duration of the agreed qualification.
- Funds can only be paid when connected to an employed apprentice or existing member of staff, for an agreed qualification, and an agreed cost.
- 10% of all the funds you receive as a transfer from another employer count as state aid.
- If you are a levy-paying organisation and you are successful in accessing this funding, you will not be able to transfer any of your levy funds to another employer.
- Read more about the funding rules for employers.
To receive levy transfer funding from Hackney Council, you must:
- Join the Network (pledging to create at least one new apprenticeship meeting our Apprenticeship Criteria)
- Have a presence in Hackney, or within easy access of Hackney – creating local jobs for local people
- Be a non-levy paying employer (i.e. with an annual pay bill under £3m) OR be a levy paying employer who has already spent their levy allowance (i.e. has entered co-investment)
- Successful applicant businesses will need to create an account on the digital apprenticeship service to receive the transfer and pay for apprenticeship training.
- Transfer payments will be made monthly to your apprenticeship account, and then paid directly to the chosen training provider.
Other benefits available:
This scheme offers discounted travel for all apprentices on recognised Apprenticeship Programmes.
Class 1 (Employer) National Insurance Contributions
From April 2021 employers of apprentices under the age of 25 will no longer be required to pay secondary Class 1 (employer) National Insurance contributions (NIC) on earnings up to the Upper Earnings Limit (currently £50,270), for those employees. This is up to a 13.8% saving on everything the apprentice earns over £8,840 a year for the employers of apprentices.
An example of the savings for employers could be:
For an apprentice aged under 25 earning London Living Wage at £10.85 an hour (approx £19,700 per annum), the employer’s 13.8% NICS contribution over the lower earnings limit (currently set at £8,840) is waived.
This means that the employer will be making a saving of £1,498 per annum for the duration of the apprenticeship whilst the employee is under 25.
This is calculated as follows:
(£19,700 – £8,840 = £10,856) x 13.8% = £1,498,
This also includes people already on an apprenticeship as long as they are still under age 25.
Page last reviewed: November 19, 2021