Hiring an apprentice in the UK isn’t just about giving someone a leg up, it’s a smart business move. In fact, graduates and apprentices who are trained in-house often stay with their employers: research shows that 65 % of apprentices remain with the company that trained them,
From generous government funding to national insurance relief, there are real, tangible employer incentives for apprentices that can help you cut costs, build skills in-house, and boost your company’s reputation.
In this post, we break down exactly what’s on offer in 2025–26 in terms of apprenticeships: what funding is available, who’s eligible, how to apply, and why bringing on an apprentice might be one of the smartest decisions your business can make this year.
What are the employer incentives for hiring an apprentice?
There’s a long list of reasons why thousands of UK businesses are investing in apprenticeships, and not just the financial ones. The government provides incentives for employers taking on apprentices to help further encourage employers to help fill skill gaps and build a talented UK workforce.
Apprenticeship funding for employers who hire apprentices
If your apprentice is aged 16–18 (or 19-25 with an education, health and care (EHC) plan or care leaver status), you’ll get a £1,000 incentive payment from the government. It’s paid in two instalments - £500 after 90 days, and another £500 after a year.
On top of that, smaller businesses only pay 5% of the apprentice’s training costs. The government covers the remaining 95%, up to the maximum funding band. That’s a massive cost saving over hiring a fully trained worker.
Learn more: How Much Do Apprenticeships Cost an Employer?
Upskilling current staff for free
You don’t have to hire someone new to use an apprenticeship. If you’ve got a staff member who wants to train into a new role, you can enrol them on an apprenticeship too. The same funding rules apply, so you could be developing in-house talent without spending big on external training.
National Insurance savings
If your apprentice is under 25, you don’t have to pay employer National Insurance contributions on their earnings (up to £967 per week). That could save you up to £3,000 a year per apprentice.
Lower wages (legally)
Apprentices can be paid the Apprenticeship Minimum Wage, currently £7.55 per hour if they’re under 19 or in their first year. After that, they move to the National Minimum Wage for their age bracket. This makes apprenticeships a more affordable hiring route, especially for small businesses.
Good for your brand
Hiring apprentices shows you’re investing in people, not just profits. It’s a positive signal to future hires, customers, and partners that you’re committed to development, opportunity, and long-term thinking.
What funding does the government provide to apprentice employers?
Government support depends on your size and payroll.
Non-levy-paying employers
If your annual wage bill is under £3 million, you’re classed as a non-levy employer. You’ll:
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Pay just 5% of the training and assessment costs
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Get 95% funding from the government (more in some regions)
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Receive the £1,000 incentive for eligible apprentices
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Benefit from NI relief for under-25s.
You’ll still need to choose an approved apprenticeship training provider such as Total People and set up an online account to manage your funding, but it’s all relatively straightforward.
Learn more: What Apprenticeship Funding is Available for SMEs?
Levy-paying employers
If your annual wage bill is over £3 million, you’ll be paying the Apprenticeship Levy - 0.5% of your payroll, collected monthly.
In return, you get that money back into a digital apprenticeship account (plus a 10% government top-up). You can use these funds to train apprentices, new hires or existing staff, and even transfer up to 50% of unused funds to other businesses.
Which companies are eligible for apprenticeship funding?
The short answer: all UK companies can access apprenticeship funding, as long as the apprentice and the training programme meet the official eligibility criteria.
Here's how it breaks down:
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SMEs: eligible for 95% government funding and the £1,000 incentive payment
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Large employers (levy payers): use levy funds, get a 10% top-up, and can transfer unused funds to other businesses
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Any business: can claim National Insurance relief for apprentices under 25.
To qualify for funding, the apprenticeship must be with an approved training provider and aligned with an approved apprenticeship standard. You’ll also need to follow the government’s 2025–26 apprenticeship funding rules.
How can a company apply for apprenticeship funding?
The process is relatively simple:
1. Register for the apprenticeship service
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Visit gov.uk and create an account on the Apprenticeship Service
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Link your PAYE scheme to manage payments and track funding.
2. Choose a training provider
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Select from the list of government-approved training providers
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They’ll help you agree on a training plan and manage much of the admin.
3. Recruit or select your apprentice
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You can use the National Apprenticeship Service to advertise vacancies, or...
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Select an existing employee who wants to develop in a new direction.
4. Claim your funding and incentives
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The £1,000 incentive will be paid automatically through your provider if your apprentice qualifies
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Training costs are paid directly to the provider via the online system
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National Insurance savings are claimed through your payroll software.
5. Optional: Accept a levy transfer
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If you’re an SME, you can apply to receive a levy fund transfer from a larger employer. Many companies offer this to support their supply chain or social impact goals.
Learn more: When Do Apprenticeship Levy Funds Expire?
Employer Incentives for Apprentices FAQs
How much can my business save by hiring an apprentice?
If you're a non-levy-paying employer, you'll only pay 5% of the training cost, the government covers the other 95%. Plus, if your apprentice is under 25, you won’t pay employer National Insurance contributions, which could save you up to £3,000 per year per apprentice.
What is the £1,000 employer incentive payment for apprentices?
The £1,000 government payment is available when you hire an apprentice who is either:
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Aged 16–18
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Or aged 19–25 and has an Education, Health and Care (EHC) plan or is a care leaver.
You’ll receive £500 after 90 days and £500 after 12 months. It’s paid via your training provider.
Can I get funding to train existing staff through apprenticeships?
Yes. You can use apprenticeship funding to upskill current employees as long as the training is relevant to their job or career development. The same funding rules and employer incentives apply.
What if my business doesn't pay the apprenticeship levy?
If your annual payroll is under £3 million, you're considered a non-levy employer. You still qualify for 95% government funding, the £1,000 incentive (if applicable), and National Insurance relief for under-25s.
Do I have to apply separately for the £1,000 apprenticeship funding for employers?
No, the £1,000 incentive is triggered automatically if your apprentice qualifies. Your training provider manages the process, and the payments come through them.
Choose Total People as your apprenticeship provider
There’s never been a better time to explore apprenticeships as an employer. Whether you’re a growing SME or a big company with unused levy funds, the incentives for employers to hire apprentices are too good to ignore.
You’ll build loyalty, save money, and develop talent that fits your business from day one.
Ready to get started? Contact Total People today.
