Explained: Apprenticeship Funding, National Insurance Relief and Incentives

With rising payroll costs and a growing talent shortage across the UK, employers are actively seeking smarter, more cost-effective ways to build their workforce. One of the most strategic solutions? Hiring an apprentice.

Apprenticeships not only help to bridge the skills gap in your business, but they also come with government-backed apprenticeship funding and other financial incentives.

Hiring an apprentice and the Apprenticeship Levy: Am I a levy payer?

Costings as an employer depend on whether you pay into the apprenticeship levy. As an employer, you pay into the Apprenticeship Levy each month if you:

• have an annual pay bill of more than £3 million
• are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million

For further information on the apprenticeship levy please visit – Pay Apprenticeship Levy – GOV.UK

How much will it cost to train an apprentice?

Levy-paying employers: Use your levy funds to cover 100% of the training and assessment costs.

Non-levy paying employers (SMEs):

• 100% of the funding is covered by the government if your apprentice is aged 16-21 from the date of enrolment.
• 95% of the funding is covered by the government if your apprentice is aged 22+ from the date of enrolment.
• If your apprentice is aged 22+ you can apply for 100% funding via levy transfer from a larger employer. Levy employers can now transfer up to 50% of their unused levy funds, supporting smaller businesses in hiring apprentices at no training cost.

Why hiring an apprentice can save your business thousands 

UK employers hiring apprentices under the age of 25 can benefit from a National Insurance relief and exemption. This means you won’t have to pay the increased 15% Employer National Insurance (NI) contributions on their earnings, a potential savings of over £3,000 per apprentice each year.

This government-backed relief is designed to help businesses lower payroll expenses while investing in young talent.

To qualify for NI relief, apprentices must:

• Be under 25 years old
• Be on an approved UK government apprenticeship standard or framework
• Earn less than £967 per week (or £50,270 annually)

If your apprentice meets the criteria, you’ll need evidence to apply for insurance relief. You can view all the different types of evidence you would need here and contact us for more support.

How much can you save? Look at the table below to see an example of savings.

Source: South Yorkshire Apprenticeship Hub

Claiming other funding and financial incentives

Beyond National Insurance relief, UK employers can access additional funding streams and grants to support apprenticeship hiring:

Get a £1,000 bonus for hiring an eligible apprentice

You could receive a £1,000 incentive if your apprentice is:

• Aged 16 to 18 (or 15 in specific school-year circumstances)
• Aged 19 to 24 with an Education, Health and Care (EHC) plan
• Aged 19 to 24 and has previously been in care

This payment helps cover initial employment costs such as uniforms, travel, or equipment.

CITB Grants: Extra funding for construction apprenticeships

If you’re a construction employer registered with the Construction Industry Training Board (CITB), you may be eligible for:

• £2,500 attendance grant per year
• £3,500 achievement grant upon completion

These grants significantly reduce the cost of training and retaining skilled workers in the construction sector. Read the full details here.

Need help with apprenticeship funding? Talk to our experts today

Navigating the apprenticeship system can feel overwhelming, but you don’t have to do it alone. Whether you’re looking to save on hiring costs or understand your funding options, our team is here to guide you through the process.

Reach out today to learn how apprenticeships can power your business growth while saving you money.