The government has recently announced that the cash incentive scheme for employers recruiting new apprentices of all ages will double to £3,000 from the 1st of April 2021 and £4,000 for those aged 16-18.
Are you missing out?
With Government training and recruitment incentives currently on offer, we have added additional dates this spring for our free one-hour Government incentives and free recruitment services webinars.
How is the Apprenticeship funded?
Full government funding is available for an apprentice aged between 16-18 years old and where the employer employs less than 50 employees. Full funding is also available for apprentices aged 19 to 24 who have either been in care or has an education health care plan.
An employer contribution fee will be required for:
- Non-levy paying employers recruiting an apprentice aged 19 or over
- Non-levy paying employers who employ more than 50 employees and recruit a 16-18 year old apprentice
Payment plans and schedules can be discussed with our apprenticeship Account Managers prior to signing contracts. For more information about apprenticeship contribution fees please contact one of our Apprenticeship Advisers on 01206 712727.
Apprentice minimum wage
A National Minimum Wage for apprentices was introduced on 1 October 2010. The wage applies to all apprentices aged under 19; and apprentices aged 19 or over in the first year of their Apprenticeship.
As of April 1st 2021 the national minimum wage for apprentices is £4.30 an hour and applies to time working, plus time spent training that is part of the Apprenticeship. This rate applies to apprentices under 19 and those aged 19 or over who are in their first year. Apprentices must be paid at least the national minimum wage rate if they’re an apprentice aged 19 or over and have completed their first year.
Employers are free to pay above the new wage and many do so, but employers must ensure that they are paying their apprentices at least the minimum wage. If an apprentice is on a higher wage, the employer must continue to pay that for the remainder of the training or until the apprentice becomes eligible for the full national minimum wage.
You must be at least:
- school leaving age to get the National Minimum Wage
- aged 23 to get the National Living Wage – the minimum wage will still apply for workers aged 22 and under
These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.
|23 and over||21 to 22||18 to 20||Under 18||Apprentice|
Apprentices are entitled to the apprentice rate if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
Example: An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.30.
Apprentices are entitled to the minimum wage for their age if they both:
- are aged 19 or over
- have completed the first year of their apprenticeship
Example: An apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.36.
The following rates were for the National Living Wage (previously for those aged 25 and over) and the National Minimum Wage (for those of at least school leaving age) from April 2016.
From 1 April 2021 the National Living Wage was extended to 23 and 24 year olds.
Financial Information and Support
Employers are not required to pay National Insurance Contributions for apprentices under the age of 25 on earnings below the higher tax rate of £827 a week (£43,000 a year).
On 8th July 2020 the Government announced increased employer incentives for apprenticeships in recognition of the value they bring to the economy, revealing that the cash incentive scheme for employers recruiting new apprentices aged 25 plus were to double to £3,000 per apprentice, regardless of age, and with no limit on the number of payments that a business can receive.
Chancellor Rishi Sunak originally announced the cash incentives back in August 2020, with the then offer seeing firms who took on new apprentices between 16 – 24 eligible to receive £2,000, whilst those who employed a new apprentice aged 25 and over would be paid £1,500.
Acknowledging the worth of apprenticeships to the UK economy, the Government’s Plan for Jobs strategy made several updates to existing apprenticeship funding policy. Mr Sunak also revealed the extension of the scheme to September 2021 along with several new plans as part of his recent budget speech.
Coming into effect from April 1st 2021, the extension sees the incentive become more generous, regardless of the apprentice’s age, with a £3,000 payment now being offered for all newly recruited apprentices. In some cases this could result in a £4,000 incentive to support apprentices and their employers.
So what is available?
Between April 1st 2021 and 30th September 2021 the Apprenticeship funding incentives available for employers are as follows:
- £4,000 for 16-18 year olds (£3,000 as announced plus the additional £1,000 the Government already provides)
- £4,000 for 19-24 year olds who have previously been in care or who have a Local Authority Education, Health and Care plan (£3,000 as announced plus the additional £1,000 the Government already provides)
- £3,000 for 19-24 year olds
- £3,000 for 25+ year olds
Employers with fewer than 50 people working for them will be able to train 16-18-year-old apprentices without making a contribution towards the costs of training. The government will pay 100% of the training costs for these individuals.
The apprenticeship levy
The levy was introduced on 6 April 2017 and is charged at a rate of 0.5% of an employers’ pay bill, paid through PAYE on a monthly basis.
Each employer has a levy allowance of £15,000, this is not a cash payment. It works in a similar way to the personal tax allowance and cannot be used to purchase apprenticeship training.
The impact of the allowance means that fewer than 1.3% of UK employers, those with an annual pay bill of more than £3 million, are liable to pay the levy. Employers in England who pay the levy
will be able to get out more than they pay in, through a 10% top-up to their online accounts.
An employer’s pay bill is made up of the total amount of the employees’ earnings that are subject to Class 1 National Insurance contributions, such as:
– pension contributions
What about non-levy paying employers?
Employers with a pay bill of less than £3 million a year will not need to pay the levy.
At least 90% of non-levy paying employers’ apprenticeship training and assessment costs in England will be paid for by the government. The government will ask these employers to make a 5% contribution to the cost, paid directly to the provider, and the government covers the rest. This cost will be spread over the lifetime of the apprenticeship.
The government is offering additional support to organisations with fewer than 50 employees* by paying 100% of training and assessment costs for their apprentices aged 16-18 and for those aged 19-24 formerly in care or with a local authority education, health and care plan.
The government will also pay employers, no matter what size, £1,000 for each 16-18 year old apprentice they employ.
The Apprenticeship Levy