Imagine an empowered, highly skilled, and motivated workforce; that’s precisely what apprenticeships offer. But did you know that significant funding is readily available to help you build this dream team? Apprenticeship funding for employers is a golden ticket to invest in promising talent and uplift your company’s productivity. Apprenticeships are not just about enhancing workforce capabilities. Their benefits also include opening a door to creating a powerful, sustainable, and economically prosperous future for your business.
Although apprenticeships offer numerous advantages for employers, understanding the apprenticeship funding landscape is essential to make the most of this valuable opportunity. With the right knowledge and guidance, you can navigate the apprenticeship rules and access the financial support available to support your apprenticeship programs.
In this comprehensive guide, we’ll:
- Explore why employers need apprenticeship funding
- Review apprenticeship funding rules and guidance for employers and demystify the apprenticeship levy
- Shed light on how to maximise funding potential for your apprenticeships
Why do employers need apprenticeship funding?
An apprenticeship is a training program where individuals get the opportunity to receive training and qualification while working with an employer. Apprenticeship programs are regaining popularity as they offer a great alternative to traditional (and expensive) university education. The most appealing aspect of apprenticeships is that the apprenticeship training is cost-free for the learners themselves.
It’s worth mentioning that most employers view apprenticeships as investments, as they often yield substantial returns. On average, an apprentice generates more benefits than the cost incurred during the apprenticeship. The expenses associated with apprenticeship training for employers can differ based on the selected program and the company. To run an impactful apprenticeship program, employers must allocate budgets for various costs, such as wages, relevant expenses, recruitment fees, and additional training. This is where various apprenticeship funding options come into play, but let’s talk more about that later.
Before we delve into the various options for apprenticeship funding, let’s look at some of the benefits of apprenticeship programs and the reasons why employers need funding for apprenticeships.
Wondering how to attract the best talent? Maybe you can start with creating an apprenticeship job description that stands out.
Workforce development
Apprenticeships provide an opportunity for employers to develop a highly skilled workforce by offering structured training programs. Apprenticeships allow employers to nurture their own talent and shape the skills of their workforce according to their specific needs. By accessing funding, employers can invest in apprenticeship programs that enhance the skills and knowledge of their employees, leading to increased productivity and competitiveness. This also enables employers to hire and train individuals in the exact skills required for their industry or organisation, ensuring a well-prepared and adaptable workforce.
Talent acquisition and training
Apprenticeship programs can be a valuable talent acquisition strategy for employers. By offering apprenticeships, employers can attract motivated individuals who are eager to learn and gain practical experience. Apprenticeships provide a pathway for employers to identify and recruit talented individuals who can contribute to their organisation’s growth. By accessing funding, employers can offset the costs associated with training and development, making apprenticeships a more affordable option compared to traditional recruitment methods.
Apprenticeships also provide a structured framework for training and developing existing employees within an organisation. With apprenticeship funding, employers can provide their employees with formal training programs that align with industry standards and best practices. This ensures that employees acquire the necessary skills and knowledge to excel in their roles.
Knowledge transfer
Apprenticeships facilitate the transfer of knowledge and expertise within organisations. Experienced employees can act as mentors or trainers for apprentices, passing on their knowledge and skills. This helps to preserve and share valuable institutional knowledge, fostering a culture of continuous learning and growth.
Apprenticeships can be an integral part of an employer’s succession planning strategy. By training apprentices and developing their skills, employers can identify potential future leaders within their organisation and groom them for key positions, ensuring a smooth transition of talent and knowledge. Investing in apprenticeship programs and providing employees with opportunities for skill development also demonstrates an employer’s commitment to their workforce, which boosts their employer branding.
Apprenticeship funding rules and guidance for employers
The world of apprenticeship funding can be complex, with numerous rules and regulations to follow. Understanding the policies and requirements is key to successfully navigating this landscape. Let’s delve into the essential aspects of apprenticeship funding rules and guidance for employers.
What funding can you get?
When it comes to apprenticeship funding, employers have various options available to support their apprenticeship programs. Understanding the different funding sources can help you maximise financial support for your initiatives. Let’s explore the funding opportunities and incentives that you can access as an employer.
Apprenticeship levy
The apprenticeship levy is a central component of the UK’s apprenticeship funding system. It was introduced in 2017 by the UK Government to help fund apprenticeship programs. The levy applies to employers in the UK that have an annual pay bill of over £3 million. These employers must pay 0.5% of their total annual pay bill towards the levy. This payment is made through the Pay as You Earn (PAYE) tax system alongside tax and National Insurance.
The government then provides a 10% top-up to the funds in the employer’s digital account, which means for every £1 an employer pays in, the government adds an extra 10 pence. This is to encourage employers to hire and train more apprentices.
Funds from the apprenticeship levy can be used to pay for apprenticeship training and assessment with an approved training provider. The funds cannot be used on wages, travel and subsidiary costs, managerial costs, traineeships, work placements, or the costs of setting up an apprenticeship programme.
The apprenticeship levy provides a dedicated funding mechanism for employers to invest in skills development within their organisation. By contributing to the levy fund, employers actively contribute to shaping a skilled workforce and fostering economic growth.
Apprenticeship levy allowance
The apprenticeship levy allowance is set at £15,000 for each tax year. This means the amount of the apprenticeship levy that an employer needs to pay is reduced by £15,000. Essentially, if you’re an employer with an annual pay bill of more than £3 million, you need to spend 0.5% of the amount over £3 million on the apprenticeship levy. The £15,000 allowance effectively means that only employers with a pay bill that exceeds £3 million are liable to pay the levy.
For instance, if an employer had a pay bill of £5 million, they would need to spend 0.5% of £2 million (£5 million minus the £3 million threshold), which equals £10,000. This amount is less than the £15,000 allowance, so this employer would not have to pay the apprenticeship levy.
However, if an employer had a pay bill of £10 million, they would need to spend 0.5% of £7 million (£10 million minus the £3 million threshold), which equals £35,000. After subtracting the £15,000 allowance, this employer would need to pay £20,000 towards the apprenticeship levy.
The UK government maintains a webpage on apprenticeship funding rules for employers where you can find more detailed information on apprenticeship funding rules and other apprenticeship checklists.
Co-investment model for non-levy paying employers
For employers with an annual wage bill below £3 million, known as non-levy paying employers, there is still an opportunity to access funding through the co-investment model. Under this scheme, the government covers 95% of the apprenticeship training and assessment costs, while the employer contributes the remaining 5%. This model enables smaller employers to participate in apprenticeship programs and benefit from the financial support available.
Additional incentives and grants
In addition to the apprenticeship levy and co-investment model, employers may be eligible for various incentives and grants to further reduce the costs associated with apprenticeships. These incentives are designed to encourage employers to invest in specific target groups or industries. For example, if you hire apprentices aged 16-18, you may be eligible for additional financial support. Similarly, employing an apprentice who was previously in care or has an Education, Health and Care (EHC) plan can also make you eligible for extra funding.
Interested in recruiting younger apprentices? We invite you to read our guide on Early careers recruitment. Furthermore, StudySmarter can help you identify the right times to recruit recent graduates. Download our recruitment calendar.
Local and regional funding initiatives
Beyond the national apprenticeship funding schemes, there are often local or regional funding initiatives available to employers. These initiatives aim to support specific industries, address local skill gaps, or target priority areas determined by regional governments or organisations. It’s worth exploring these opportunities within your geographical area to tap into additional funding streams that may be accessible to you.
Sector-specific grants and funds
Certain industries and sectors have their own grants and funds dedicated to supporting apprenticeships. These grants are often provided by industry bodies, trade associations, or sector-specific organisations. They aim to encourage the development of skills and talent within those industries. Researching and engaging with sector-specific associations and organisations can help you identify any grants or funding opportunities specific to your industry.
Maximising funding potential in apprenticeships
When it comes to apprenticeships, understanding the maximum funding potential can help you make informed decisions about your talent development initiatives. Maximising the available funding can provide significant support for your apprenticeship programs. If your funding options are currently limited, you can plan and implement your apprenticeships strategically to enhance your funding potential. No matter how limited or expansive your apprenticeship funding is, there are ways you can make it go further. Let’s explore how employers can make the most of the financial assistance available.
Strategic planning and program design
To optimise your funding potential, take a strategic approach to your apprenticeship programs. Consider the skills gaps within your organisation and design apprenticeship programs that address these needs effectively. By aligning your training programs with your business goals and talent development strategies, you can position your apprenticeships for maximum funding support.
Apprenticeship levy funding cap
The apprenticeship levy has a funding cap that determines the maximum amount of funding you can access. Currently, the funding cap is set based on the funding band assigned to the specific apprenticeship standard or framework. Each apprenticeship program has an associated funding band that represents the maximum amount of funding available for that particular apprenticeship. Remember to review the funding bands and ensure that the costs of your chosen apprenticeship program align with the funding available!
Negotiate training costs
While the funding cap sets the maximum amount of funding available, the actual costs of apprenticeship training can vary. You have the opportunity to negotiate and discuss the training costs with approved training providers. By engaging in these conversations, you may be able to secure more favourable pricing arrangements, allowing you to make the most of the available funding and potentially stretch it further.
Use approved training providers
Working with approved training providers is crucial for accessing apprenticeship funding. These providers have undergone a rigorous quality assurance process and offer apprenticeship programs that meet the government’s standards. By partnering with approved training providers, you can ensure your apprenticeship programs are eligible for funding and maintain or increase the financial support accessible to you.
Monitor apprenticeship progress
Monitoring and recording the progress of your apprentices is essential for maintaining eligibility for funding. Regularly update their training records and track their achievements to demonstrate compliance with apprenticeship funding rules. This diligent monitoring allows you to access and retain the funding support available throughout the duration of the apprenticeship.
Additional grants and incentives
In addition to the apprenticeship levy, there may be additional grants and incentives that can further your funding potential. These grants and incentives are often designed to encourage specific types of apprenticeships or target specific groups, such as young apprentices or individuals from underrepresented backgrounds. Researching and exploring these opportunities can help you access additional financial support and increase the overall funding for your apprenticeship programs.
Leverage employer contributions
In some cases, employers may choose to contribute additional funds beyond the required apprenticeship levy amount. These additional contributions can enhance the funding available for your apprenticeship programs. By investing further in the development of your apprentices, you not only increase the funding potential but also demonstrate a strong commitment to their growth and success.
Stay up-to-date
The apprenticeship funding landscape is subject to ongoing changes and updates. Staying informed about the latest developments, policy changes, and funding opportunities is, therefore, crucial. Engage in continuous learning by attending apprenticeship funding seminars, participating in industry forums, and staying connected with apprenticeship-related publications.
Unlocking apprenticeship funding for employers is a strategic investment in talent development and business growth. By understanding the apprenticeship funding rules and guidance, you can create robust apprenticeship programs that drive skill acquisition, employee engagement, and organisational growth. Embrace the opportunities presented by apprenticeship funding and stay updated on the evolving funding landscape to make the most of your investment. Whether you’re just beginning your journey with apprenticeships or you’ve been employing apprentices for some time, as you navigate this landscape, there is no debate that you are positioning your organisation to thrive by building a skilled workforce and contributing to the future of your industry.
