Costs and the apprenticeship levy

Apprentices earn the national minimum wage, although many employers pay more than this, with the average wage at £170 per week. In some roles the wage may increase as the apprentice progresses and takes on more responsibility, and they'll also get the same benefits as an employee, including a holiday allowance.

The apprenticeship levy is a compulsory tax on employers in England to help fund the development and delivery of apprenticeships, with the aim of improving the quality and quantity of those available.

Employers fall into one of two groups: levy payers and non-levy payers. Employers with a wage bill of more than £3 million are required to pay the levy, whether they employ an apprentice or not. Their wage bill includes all payments to employees that are subject to Class 1 secondary National Insurance Contributions, such as wages, bonuses and commission.

Levy-paying employers

Levy-paying employers

If your wage bill is £3 million or more, you have to pay the levy.

The amount payable is 0.5% of your wage bill. All employers get a £15,000 allowance to offset against the amount they have to pay.

The payments go into the online Apprenticeship Service, which lets you manage your apprenticeship funding and delivery. You'll be able to see how much is in your account and allocate payments to providers of government-approved apprenticeships.

You can work with training providers to agree on an apprenticeship programme suitable for your business. The levy can be used to pay for the End Point Assessments, but not the registration or certification of non-mandatory qualifications.

Non-levy-paying employers

Non-levy-paying employers

If your wage bill is under £3 million, you don't have to pay the levy.

You won’t need to use the online Apprenticeship Service to pay for apprenticeship training: instead you'll agree a payment schedule with the training provider and pay them directly. You'll contribute 5% towards the cost of the required apprenticeship training and the government will pay the remaining 95%.

The funding process

Find out more about how to register and use the apprenticeship service and the funding process.