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Apprenticeship Funding Eligibility & Rules Simplified for Employers

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Are you an employer looking to hire an apprentice?

An apprenticeship is a great way to upskill existing employees or recruit new and upcoming talent to help build a strong work team. Research shows 96% of apprenticeship employers report benefits to their business.

In 2024, newly introduced government initiatives aim to facilitate the creation of up to 20,000 additional apprenticeships across the UK, empowering a greater number of businesses to take on an apprentice. If you’re new to apprenticeships as an employer, tackling the financial aspect of hiring an apprentice is easier than it seems! This blogpost will be discussing the ins and outs of apprenticeship funding eligibility and rules.

What is apprenticeship funding?

Apprenticeship funding is the financial support provided by the government to employers for the training of apprentices. This funding covers the costs associated with apprenticeship programmes, such as training, assessment, and their wage.

The UK government currently funds apprenticeships through the apprenticeship levy, this is something we will go on to discuss later in the blog. 

If you want to hire an apprentice, then it’s important to understand the various aspects of funding an apprenticeship.

What’s the apprenticeship levy?

The apprenticeship levy refers to a tax UK employers have to pay if their annual bill is over £3 million. The tax is set at 0.5% of their annual pay bill. These funds are then collected through the levy and are used by employers to cover the cost of an apprenticeship training programme.

Not only is this beneficial for employers who require apprenticeship training, it encourages businesses to hire apprentices so they can put their funds to good use. This also helps the UK have thriving industries and a skilled workforce. 

In 2024, levy paying businesses will be able to donate 50% of their unspent funds to other businesses, this is up from the 25% it was previously. This is because the government is pushing for more apprenticeships to help develop a more skilled UK workforce. 

How do non-levy paying employers get funding?

Non-levy employers are eligible for substantial apprenticeship funding support from the government. They can receive 95% of their apprenticeship training fees funded by the government if their annual wage bill falls below £3 million. 

If they have over 50 employees and hire an apprentice aged 16 or above, or if they have fewer than 50 employees and hire an apprentice aged 19 or above, they qualify for this level of funding. 

Non-levy employers can access 100% funding for their apprenticeship training fees from the government if they meet the wage bill criteria and hire an apprentice aged 16 to 18, regardless of their employee count.

What are apprenticeship funding bands?

Apprenticeship funding bands are set by the government to establish the maximum amount of funding available for each specific apprenticeship. These bands determine the financial limit within which employers can negotiate the price of apprenticeship training with their chosen training provider. 

The government allocates a funding band to each apprenticeship programme based on various factors such as the level of skills required, the duration of the apprenticeship, and the costs associated with delivering the training. This essentially means each apprenticeship programme has a varying funding band. 

Employers must make sure that the negotiated price for apprenticeship training falls within the allocated funding band to effectively utilise available funding resources.

An example of the apprenticeship funding bands

Let's consider an example of a Hairdressing Apprenticeship. 

The government may allocate a funding band of £4,000 for this particular apprenticeship. This means that the maximum amount of funding available for the training and assessment of a Hairdressing Apprentice is £4,000.

Now, let's say an employer negotiates with a training provider and agrees to a training cost of £3,500 for the Hairdressing Apprenticeship. Since this negotiated cost falls within the funding band of £4,000, the employer can utilise the available funding to cover the training expenses for the apprentice.

However, if the negotiated training cost exceeds the funding band (£4,500 for example), then the employer would need to cover the additional £500 as it surpasses the maximum funding available within the allocated band. 

This means, understanding and adhering to the apprenticeship funding bands is essential for employers to effectively manage their apprenticeship programmes within budget.

Does the government pay the apprentices wage?

In the UK, apprenticeship wages aren’t covered by the government levy, instead, employers are responsible for paying their apprentices. This includes wages for time spent at the workplace, college, or with the training provider. 

Apprentices are entitled to at least the apprentice minimum wage, which is £5.28 per hour for 16–18-year-olds and for 19+ year olds in their first year of the programme. Since apprentices are considered employees, they have rights to holiday and sick pay, along with other staff benefits. 

Depending on factors such as age and income, apprentices may also qualify for pension auto-enrolment. Employers don’t need to pay Class 1 National Insurance contributions for apprentices earning less than £967 per week. 

It’s also worth noting that many employers choose to pay above the minimum wage to reflect the value apprentices bring to their businesses and to attract high-quality apprentices.

Apprenticeship funding rules 2023/24

If you are an employer of an apprentice, you are obligated to abide by these funding rules for apprenticeships:

  • Funds must be used exclusively for training and assessing apprentices
  • Payments to training providers must adhere to agreed terms
  • Employers negotiate training costs within allocated funding bands
  • Costs should deliver high-quality outcomes for apprentices
  • Employers cover extra expenses beyond funding
  • Adherence to government funding rules is mandatory
  • Employers may face audits for regulatory compliance
  • Employers are responsible for paying their apprentice's wage
  • Levy paying businesses can donate 50% of unspent levy funds to other businesses 

Choose Total People as your apprenticeship provider

We’re the leading provider in the North, offering highly skilled learning coaches who’ll provide your apprentice with top-quality training. Our goal is to help your apprentice become a skilled member of your team, contributing to your business's success. Access apprenticeship funding with Total People today.

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