How are apprenticeships funded?
The main way to fund an apprenticeship in the UK is through the Growth and Skills Levy, a government scheme designed to help businesses hire apprentices and upskill existing team members.
Apprentices do not pay tuition fees themselves, and earn a regular salary, making an apprenticeship an attractive alternative to other higher education options.
Apprenticeship funding in a nutshell
- Apprenticeships in the UK are funded through the growth and skills levy, which is used to cover the cost of an apprentices training.
- Levy payers: If your organisation contributes to the Growth and Skills Levy, then you can use the levy to fund an apprenticeship.
- Non levy payers: still benefit from funding. 100% of the costs are covered for apprentices between the age of 16 and 21, and at least 95% for apprentices over the age of 21.
In this video, our apprenticeships expert Grace Mansell explains how funding will work for the new apprenticeship units initiative and what this means for businesses.
Is my business eligible for apprenticeship funding?
All businesses in the UK can benefit from apprenticeship funding, whether they are levy paying or not. Funding from the Growth and Skills Levy is designed to provide businesses with a cost-effective way to bring in new talent and close their skills gaps.
Levy-paying organisations
It is mandatory for all employers with a payroll over £3m to pay into the Growth and Skills Levy. Those businesses are then available to access fully funded apprenticeship programmes.
They can choose to use those funds on the programmes that best suits their needs. For example, a business could choose to hire new talent to close skills gaps, such as AI, cyber security or data.
They could also use their funding to send an employee with a Level 3 Data Essentials apprenticeship qualification onto a Level 4 Data Analyst programme to support with their progression.
The Growth and Skills Levy is intended to give businesses more flexibility in how they use their funds. This includes Apprenticeship Units, which are designed to provide shorter and more impactful training for businesses.
Non-levy paying 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.
Other incentives for businesses
There are a range of other benefits for businesses in hiring an apprentice, which are listed on the government website. This includes payments for hiring apprentices in certain age ranges, or those that are care leavers or have an Educational, Health and Care Plan.
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.
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.
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?
Not only do businesses from funded training by choosing an apprenticeship, they also reap the social and economic benefits that come with investing in their apprentice talent.
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.
Popular apprenticeship programmes
Apprenticeship funding can be used to upskill your business in some of the most sought after skills, including AI automation, data analysis, cyber security and more. Explore some of our most popular programmes below.
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.
The social and economic impact of apprenticeships
“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.”
