Hiring an apprentice is often assumed to be complicated or expensive, particularly by smaller businesses that picture large corporate training schemes. In practice, most employers pay only a small fraction of training costs, and some pay nothing at all, while gaining a motivated employee trained specifically around the skills their business actually needs.
This guide explains how business apprenticeships work in the UK, how funding is structured, and what employers need to know before taking one on.
What Apprenticeships Offer Employers
Apprenticeships let a business develop talent internally, combining practical, on-the-job experience with structured off-the-job training, so employees build exactly the skills the role and business require, rather than hoping a new hire already has them.
How Apprenticeship Funding Works
The Apprenticeship Levy
Large employers with an annual payroll over £3 million pay the apprenticeship levy, contributing 0.5% of their payroll into a digital account used specifically to fund apprenticeship training. This funding must be used within a set period or it expires, so levy-paying employers benefit from planning apprenticeship intake proactively.
Funding for Non-Levy Employers
Smaller businesses that do not pay the levy still receive substantial government support, typically covering the large majority of training costs, with the employer contributing only a modest percentage of the remainder. For younger apprentices, funding support tends to be even more generous.
Levy Transfers
Larger, levy-paying businesses can transfer a portion of their unused levy funds to other employers, including smaller businesses, to help cover apprenticeship training costs, creating an additional funding route worth exploring.
Choosing the Right Type of Apprenticeship
Apprenticeships span a very wide range of levels and industries, from entry-level roles through to degree-equivalent programmes for existing staff looking to upskill into more senior positions. Matching the apprenticeship level to both the role and the business’s genuine skills gap produces far better long-term results than defaulting to the most familiar or lowest-level option.
What Employers Are Responsible For
Paying an Appropriate Wage
Employers are responsible for paying their apprentice’s salary directly, separate from the funding that covers training costs, and must meet at least the relevant apprentice minimum wage requirements.
Providing Genuine On-the-Job Learning
Apprenticeships combine practical work experience with classroom or structured learning, so employers need to ensure apprentices genuinely get hands-on exposure to relevant tasks, not just theoretical training disconnected from real work.
Working With a Registered Training Provider
Apprenticeship training is delivered through approved training providers, who work alongside the employer to structure the learning schedule, in much the same way a good onboarding process structures a new hire’s first months.
Comparing Funding by Employer Size
| Employer Type | Funding Source | Typical Employer Contribution |
|---|---|---|
| Large employer (payroll over £3m) | Apprenticeship Levy digital account | Funded from levy contributions already paid |
| Small or medium employer | Government co-investment | Small percentage of training cost |
| Small employer hiring a young apprentice | Enhanced government funding | Potentially minimal or no contribution |
| Any size, via levy transfer | Another business’s unused levy funds | Varies by transfer agreement |
Benefits Beyond the Funding
- Apprentices bring fresh perspective and enthusiasm while learning your specific processes
- Training is shaped around your business’s actual needs, not generic industry-wide skills
- Apprenticeships often improve retention, since employees trained internally frequently stay longer, complementing the broader employee retention strategies covered elsewhere on this site
- Existing staff can also take higher-level apprenticeships to develop into more senior roles
- Some incentive payments are available for hiring younger apprentices or those needing additional support
Frequently Asked Questions
Is there an age limit for apprentices?
No. Apprenticeships in the UK have no upper age limit, and are open to existing employees looking to develop new skills as well as new hires.
How much does hiring an apprentice actually cost a small business?
Most small and medium employers contribute only a small percentage of training costs, with government funding covering the majority, and in some cases, such as younger apprentices at smaller businesses, funding can cover training costs in full.
Can existing employees become apprentices?
Yes. Apprenticeships are commonly used to upskill existing staff into higher-level or more specialised roles, not just to bring in new hires.
What happens if apprenticeship levy funds are not used?
Levy funds expire after a set period if unused, which is why many large employers either plan apprenticeship intake actively or transfer unused funds to other businesses rather than losing the funding entirely.
Final Thoughts
Business apprenticeships offer a genuinely accessible way for employers of almost any size to build the specific skills their business needs, with far more government funding support available than many first assume. Understanding the funding structure for your business size, and planning intake around genuine skills gaps, turns apprenticeships into a practical long-term investment rather than an administrative burden.
