how much does an apprentice really cost?

Well, it depends, but contrary to popular belief, it’s not an expensive route to talent for employers; in fact, UK apprenticeships are designed to be affordable and supported by government funding.

In this blog we’ll look at the factors and share an illustrative calculation of apprenticeship costs. 

Let’s explore…

The actual cost can vary because it depends on things like

• Whether you pay the apprenticeship levy (we’ll come to that in a minute)

• Apprentice wages

• National Insurance payments

• If your apprentice is eligible for incentive payments and other government schemes. 

The Apprenticeship Levy 

If you pay into the Apprenticeship Levy, then your training funds are covered by the levy that you’ve already invested into. This is only for your apprentice’s training, not any additional qualifications. 

The levy applies if you have a payroll of over £3 million and is charged at 0.5% of your total payroll, collected as part of your monthly PAYE. 

If you’re not a business that pays the levy, there are other funding options available. 

Apprenticeship Co-Investment is available if your payroll is less than the apprenticeship threshold. Businesses that don’t pay for the levy do not pay for the full apprenticeship programme. The government pays 95% towards apprenticeship costs. Funding is limited to the funding band for that programme; if your training costs exceed these amounts, you are required to cover the cost. 

Let’s Talk About Salary 

The government aren’t picking up the bill here. Apprenticeship wages are not covered by the levy of funding, so this is something you will need to cover like you would any other employee. Your apprentice must receive at least the apprentice minimum wage of £8.00 for 16-18 year olds and must meet the minimum wage for their age group for the second year of their apprenticeship. 

An apprentice is an employee; they are entitled to holiday and sick pay as well as any other benefits offered to your staff. They may be eligible for pension auto-enrolment depending on age and annual income.  You are required to make National Insurance contributions for your apprentice if they earn more than £967 per week. 

Paying more than minimum wage

Minimum wage is the legal requirement. We’re of the opinion that if you can pay more, then you should to reflect the value your apprentice is bringing to your workplace, but every business and set of finances is different.    

Incentive Programmes

Alongside funding, there are government grants available to help cover the cost of taking on an apprentice. You can receive an incentive payment of £1000 if you employ an apprentice aged 16-18 or under 25 and have an education, health and care plan or who have been in the care of their local authority. You can use this grant for things like uniform, travel and wage costs. This payment is delivered to your training provider for them to pay on to you. 

Let’s give an example

Step 1: Annual salary

• £8/hr × 30 hrs/week = £240/week

• 52 weeks → £240 × 52 = £12,480/year

  Step 2: Employer NI threshold

For 2025–26, the secondary threshold for employer NICs is £967/week.

• Weekly salary: £240 < £967

• Employer NI does not apply

  So in this case, the employer pays no National Insurance

Step 3: Training & Incentives for a non-levy paying SME hiring a Level 3 Apprentice

• Training contribution (5% of £6,000) = £300

• Government incentive (if eligible) = −£1,000
  

Total first year cost £12,480 + £300 - £1,000 = £11,780*

*Please note calculations are based on current figures and are illustrative only. Please seek expert financial advice if needed.