Getting to grips with the apprenticeship funding rules can be complicated, and the rules are regularly changing (for apprenticeships starting between 1 August 2024 and 31 July 2025, the 2024 to 2025 funding rules apply). In this blog we explore the rules in more detail to make it as easy as possible for businesses, while keeping up to date with the changes.

Why Apprenticeships Matter for Businesses

Apprenticeships have long been a cornerstone of vocational education and workforce development. They provide an essential pathway for individuals to gain practical skills and experience while earning a wage.

However, not all businesses have the budget to offer apprenticeships, which is why the Government developed the apprenticeship funding rules to support businesses and apprentices in their training and assessment costs. This applies to all employers, both those who pay the apprenticeship levy and those who do not, however the amount of funding will differ depending on whether they pay the levy.

Understanding Apprenticeship Funding Rules

Employers with a pay bill of over £3 million each year are required to pay the apprenticeship levy to help pay for the costs of training and end point assessment.

Each apprenticeship programme will be allocated a category based on type and level and will fall into one of 30 different funding bands which are overseen and regularly reviewed by the Institute for Apprenticeships. Each funding band ranges from £1,500 to £27,000 that the UK government will contribute towards the apprenticeship.

What Is the Apprenticeship Levy?

For a levy paying employer, they will pay the full cost of the agreed funding band using the levy that they’ve already invested into, via their Digital Apprenticeship account. Any levy funds are topped up each month with a 10% government contribution. It is important to note that any levy funds expire after 24 months, so it is vital to utilise the levy as soon as possible.

Funding Bands and Government Contributions

For non-levy paying employers, through what is known as co-investment, they can share the cost of apprenticeship training and assessment with the Government. The employer pays 5% towards the cost of apprenticeship training with the Government paying the remaining 95%, up to the funding band maximum.

If the training costs exceed these amounts, then the employer will need to cover the costs.

How Apprenticeship Funding Works for Non-Levy Paying Employers

If the apprentice started before 1 April 2019, the employer contributes 10% towards the cost of training and assessing the apprentice and the government funds the rest (90%). This rate continues until the apprentice completes their training.For new starts from 1st April 2024, the government will fully fund apprenticeships for employers who do not pay the levy, by paying the full cost of training for:

  • Apprentices up to the age of 21 (previously only up to 18)
  • Apprentices aged 22-24 who have an Education, Health, and Care Plan (EHCP) or have been in the care of their local authority (applicable to businesses with fewer than 50 employees)

Additional Financial Support for Employers

Employers may also be able to get an additional payment of £1,000, depending on the apprentice that is hired, to help with the costs associated with taking on a younger worker.

This financial support aims to encourage businesses to invest in apprenticeships and provide young workers with career development opportunities.

Maximising Your Apprenticeship Levy with Expert Guidance

Looking to unlock the full potential of your apprenticeship levy?

We’re here to make it simple. As your outsourced HR partner, we’ll guide you through the ins and outs of apprenticeship funding, so you can make the most of every opportunity. From understanding the levy to maximising your return on investment, MAD-HR has got you covered.

Let us help you turn funding into future-ready talent. You can also explore more from the Education and Skills Funding Agency. Contact us today, and with us by your side, you’ll have expert support every step of the way.

Frequently Asked Questions

Useful questions and answers about “Investing in Skills: A Comprehensive Look at Apprenticeship Funding Rules”

How are apprenticeships funded?

The cost of an apprenticeship depends on whether the employer pays the apprenticeship levy. The government will fully fund apprenticeship training costs up to the funding band maximum for employers who do not pay the levy.

Can I get funding for a second apprenticeship?

Government funding is only available for one apprenticeship at a time.

Does the government fund apprenticeships?

Yes, the government helps pay for apprenticeship training. Smaller employers are eligible for government funding, which will cover between 95% and 100% of apprentice training costs. Non-levy-paying companies typically pay just 5% of the cost, while levy-paying employers use their levy funds, with a 10% top-up from the government.