UK Apprenticeship Funding

Apprenticeship funding in the UK is one of the most underused forms of government support for employers. The system allows businesses to train new and existing staff in hundreds of occupations - from engineering to accountancy, software development to healthcare - with the government covering most or all of the training cost. Understanding how the funding model works, and which route applies to your business, is the starting point.

The Apprenticeship Levy

Employers with an annual payroll above £3 million pay the Apprenticeship Levy - 0.5% of their pay bill - into a digital account managed through the HMRC apprenticeship service. This money can only be spent on apprenticeship training and assessment with approved providers. Levy-paying employers have a government top-up of 10% added to their account. If levy funds aren't spent within 24 months, they expire - which means many large employers have funds available that they're under pressure to use. Levy transfer (see below) allows unused levy to reach smaller businesses.

How SMEs access apprenticeships without paying the levy

Businesses with a payroll below £3 million don't pay the levy and access apprenticeships through a co-investment model. The government pays 95% of the approved training cost; the employer contributes 5%. For many occupational standards, this means the employer contribution is a few hundred to a few thousand pounds for a multi-year apprenticeship - a fraction of the commercial training cost. Apprentices earn a wage (minimum £7.55 per hour from April 2025), so the employer also funds the salary, but gains a productive employee throughout the training period.

Levy transfer

Large levy-paying employers can transfer up to 25% of their annual levy funds to supply chain businesses or community employers. This effectively extends levy funding to businesses that don't pay it. Employers in supply chain relationships with large levy payers - automotive, construction, retail, and professional services are common - should ask whether a levy transfer arrangement is possible. Some Combined Authorities also facilitate levy pooling to direct funds toward priority sectors and regions.

Government incentive payments

In addition to training funding, employers receive incentive payments for taking on apprentices: £1,000 for hiring apprentices aged 16–18, and £1,000 for hiring apprentices aged 19–24 who have an education, health and care plan or who have been in local authority care. These are paid directly to the employer in two instalments during the apprenticeship. They're on top of the training funding, not instead of it.