Apprenticeship funding — How does it work?

This article has been reviewed and is correct as of October 2nd, 2023.

Chances are that if you’ve clicked this article, you’re wondering how your Apprenticeship scheme is or can be funded. We’re going to explore the different ways you can fund your Apprenticeship scheme, whether you’re a small business or a levy-paying employer.

The Apprenticeship Levy

The levy is only paid by employers with a pay bill of over £3 million—at the moment, this only represents 2% of employers! Each one of these employers has a digital account where they can access their levy funds to spend on Apprenticeship training.

The funds will remain in the account for two years, after which time they’ll expire and the employer will not be able to access this money. However, it doesn’t go to waste. The Department for Education (DfE) use this money to pay for Apprenticeship training for smaller employers.

According to the Government website, in the last financial year 99.6% of the overall Apprenticeship budget was spent, which is great news!

What can Levy funds be spent on?

You can only use your Levy fund to invest in high-quality Apprenticeships. The good news is that, at Firebrand, we have plenty to choose from across 17 IT- and Digital-based Apprenticeships.

You can use your levy to fund any Apprenticeship level, from Level 2 (GCSE-level), to Degree-level (Levels 6 and 7)!

What can’t the Levy be used for?

You can’t use the Levy for apprentices’ wages, for 'top-up' qualifications, or for any qualifications that are not already approved as part of the Apprenticeship. You can, of course, fund this yourself.

What is the Levy Transfer?

Levy-paying businesses can choose to transfer up to 25% of their levy funds to other businesses each year to pay for their Apprenticeship training and assessments.

Which businesses and Apprenticeships you support is entirely up to you; any business can receive a transfer of levy funds even if they pay the levy themselves. 

The Apprenticeship service calculates the 25% from the amount of levy you declared in the previous tax year with the English percentage applied (this is the percentage of your employees that live in England) as well as the top up payment of 10% from the Government. You can’t transfer more than 25%.

If you’re transferring funds, you can still receive funds from another levy employer in order to take on new Apprenticeship starts.

Thinking of transferring or receiving a transfer? Our levy specialists can help you through both, taking the headache out of funding!

Non-Levy-Paying Employers

If you’re a smaller employer and you’re employing less than 50 people, the Government will fund your entire training fee when you take on apprentices aged under 19.

Taking on apprentices above age 19? Not a problem; as long as your annual pay bill is less than £3 million, you’ll only pay 5% of the cost of their apprenticeship training, the Government will fund the rest.

Additional funding and benefits

When you take on an apprentice aged 25 and under, you don’t have to pay employer National Insurance contributions until the apprentice earns over £4,189 per month.

You will also receive a £1,000 bonus when you take on any apprentice aged under 19. Or, aged 19-24 who have an education, health and care plan, or have been in care.

Still confused?

It's not surprising! The Apprenticeship funding world can be a headache for employers, but it doesn't have to be. Our levy and funding experts are here to talk you through hiring an apprentice for the first time. Or even hiring your 100th apprentice! We cater for all sizes of business, small or large, and will guide you through the funding process, making hiring a walk in the park! Now all you have to do, is decide when you want to recruit!