Funding & Incentives

Whilst employers cover the employment costs for their apprentices, there is funding available to help.

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SGS Apprenticeships

Overview

Levy and Non-Levy

All employers with a payroll over £3m already pay the apprenticeship levy, at 0.5% of their payroll. The levy funds can only be used on apprenticeship training, otherwise they are returned to the treasury after 24 months. For many levy-paying employers, the levy funds have become their training-and-recruitment fund and engaging in apprenticeships is the only way to recoup the benefits of their levy investment.

For employers who do not pay the levy (all employers with a payroll under £3m per year), the cost of training an apprentice is 100% funded by the government when employing an apprentice that is aged 16-21. If the apprentice is over the age of 21, the cost is 95% funded, with the employer only contributing 5% of the training costs. So for a Business Administration Level 3 apprenticeship which would cost £5000, a non-levy employer would pay £250.

Levy Transfers

Apprenticeships can currently be funded by a levy-paying employer transferring up to 25-50% of their unused levy to a different employer, but businesses have long called for reforms as millions of pounds are unspent and returned to the Treasury every year.

Under the new measures, large employers who pay the apprenticeship levy will be able to transfer up to 50% of their funds to support other businesses, including SMEs, to take on apprentices.

This will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need while unlocking more opportunities for young people.

Government Incentives

The government provides a range of incentives to encourage employers to engage in the apprenticeship programme:

Employers do not make any National Insurance contributions for apprentices under the age of 25.
Employers will receive a £1000 incentive if they employ a:
- 16-18 year old apprentice
- A 19-24 year old with an Education and Health Care Plan (EHCP)
- A 19-24 year old who has previously been in local authority care
The £1000 will be paid in 2 instalments (via SGS College) - £500 after 3 months and a further £500 after 12 months (assuming the apprentice remains on programme).
For smaller employers with under 50 employees, the government will pay 100% of training costs for 16-21 year old apprentices, and no employer contribution is required.

Government Support for Apprenticeships

The Full Range of Government Support for Apprenticeships

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A £1000 incentive for the following (also payable for existing employees)

Employers make no National Insurance payments for apprentices under age 25

Government Contribution to Training Costs

The government top-up levy funds with an additional 10%

Care Leaver Bursary

Non-levy Employer Guide

A Guide to Setting Up an Apprenticeship Service Account, Reserve Funding and Access Incentives

Employers have to use the Apprenticeship Service to be eligible for the new, additional incentive payments. Fortunately, the process is straightforward.

Employers will claim these incentives for themselves via the apprenticeship service. If you need help at any stage, contact SGS at 0117 909 2285 or [email protected]

The easiest and quickest process is to set up an account, then link to SGS as a training provider and give SGS permission to reserve funds on your behalf.

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Setting up the apprenticeship service account