How are apprenticeships funded?
Apprenticeships in the UK are primarily funded through the Growth and Skills Levy, an initiative designed to help businesses bring in new talent and develop existing employees.
Apprentices do not pay tuition fees themselves, and earn a regular salary, making an apprenticeship an attractive alternative to other higher education options. Learn more about how apprenticeship funding works and where to get started.
Is your business eligible for apprenticeship funding?
Most businesses are eligible for apprenticeship funding through the Growth and Skills Levy, although there are some differences depending on the size of your organisation.
What is the Growth and Skills Levy?
The Growth and Skills Levy is the latest iteration of the Apprenticeship Levy, which was first introduced in the UK in 2017.
All employers with a payroll over £3m contribute 0.5% of their wage bill into a digital account, where the funds can be used to develop and hire new talent through apprenticeship programmes. The government contributes 10% to each monthly payment, supporting businesses in building their levy funds.
This combination of employer contributions and government funding allows businesses to build a pot that they can put towards financing an apprenticeship programme.
Apprenticeship funding for large organisations
Large employers, with a payroll over £3m per year, can use their levy funds for apprenticeship training. Businesses can use this funding to pay for the training of new hires, as well as the upskilling of existing team members.
For example, funding could be used to send an employee with a Level 3 Data Essentials apprenticeship qualification onto a Level 4 Data Analyst programme to support with their progression.
Funding could also be used to help your existing employees with a career change. For example, you could enroll an employee on an AI apprenticeship to help close a critical skills gap in your organisation.
Apprenticeship funding for small businesses
Employers with a payroll of under £3m can still receive apprenticeship funding, typically around 95% of apprenticeship training fees (depending on the course and apprenticeship level).
This approach ensures that apprenticeships are accessible to all businesses, no matter the size or financial resources of an organisation.
What can the Growth and Skills Levy be used for?
Levy funds are used to cover the cost of an apprentice's training and their end point assessment. Levy funding supports many standards, including digital and technology apprenticeships in specialisms, such as data, AI, software development, cyber security and digital marketing.
It also applies to both new apprentices, and existing team members who are looking to upskill or career change using an apprenticeship course.
Changes to Level 7 funding
The UK government recently announced changes to the way that Level 7 apprenticeships are funded. You can learn more about these changes here, where our Chief Learning Officer, Jo Bishenden and Senior VP for Learning Products, Ben Sweetman, discuss what the new funding rules mean for your business.
Apprentice funding FAQs
Do apprentices pay National Insurance?
Apprentices are considered employees in the same as any other member of your team. Once they earn above the standard threshold, they will pay national insurance.
Who do I talk to about apprenticeship funding?
Employers can learn more about how to hire an apprentice and apprenticeship funding by connecting with an approved training provider, like QA.
Approved providers help businesses to understanding the rules around funding, plan their apprenticeship strategy and how to make the most of available levy funding.
Can I use the levy for existing employees?
Levy funding can be used to upskill or reskill current employees up to Level 6. This makes apprenticeships a valuable tool for developing digital skills across the workforce, helping people move into areas such as cloud computing, cyber security, data or AI as part of a structured career progression pathway.
Do learners have to pay tuition fees for an apprenticeship?
No, apprentices do not have to pay as fees will be covered by both government and employer funding. This differs from university, where learners typically accrue debt long into their careers
What are the levels of apprenticeships?
Apprenticeships range from Level 2 to Level 7, covering roles from entry level positions to degree and master’s level qualifications. Most apprenticeship levels are covered by the growth and skills levy, however there were recently changes to the funding of Level 7 apprenticeships.
Is hiring an apprentice cost effective for businesses?
We work with GIST Impact to help businesses understand the value that their apprentices bring. Our partnership with GIST enables organisations to assess the overall value created per £ invested, making it a key tool for understanding the full impact of social and environmental initiatives.
Recently, QA released new findings revealing that its apprenticeship programmes generated over £580 million in social value over the past year alone.
Amy's Apprenticeship Story
Digital Marketing Apprentice
Amy chose an apprenticeship to earn a salary whilst she learnt and avoid the debts that often come with university study. Amy now runs a successful digital marketing agency. Listen to Amy’s story to discover how a Digital Marketing Apprenticeship can lay the foundation for future success and a thriving career.
Costa Coffee: Building a Data Dream Team Through Apprenticeships
Hear first-hand how apprenticeships at Costa transformed careers, from overcoming challenges to discovering new career paths, and the impact of hands-on learning, mentorship, and dedication in unlocking new opportunities at Costa Coffee.
“QA and GIST Impact are paving the way for a future where the impact of apprenticeships can be measured beyond knowledge, skills, and behaviours, and the power of apprenticeships to transform local economies can be better understood and harnessed.”
