Apprenticeship Funding, Incentives and Costs
Understand what an apprenticeship could cost your business, what funding may be available and the other costs employers should consider when taking on or developing an apprentice.
Apprenticeships Can Be a Cost-Effective Way to Develop Your Workforce
The funding rules surrounding apprenticeships can feel complicated, but the principle is simple: employers can access significant support towards training while developing people around the skills their business actually needs.
How much your organisation contributes towards apprenticeship training depends on several factors, including whether you pay the apprenticeship levy, the age of the apprentice and the amount of funding available in your Apprenticeship Service account.
The rules changed for new apprenticeship starts from 1 August 2026, so employers should make sure they are working from the latest guidance.
Engineering Trust Training can review your circumstances, the apprentice you are considering and the programme required to help you understand the likely costs.
Apprenticeship Incentive Payments
Additional payments are available in certain circumstances and can help employers offset some of the wider costs of taking on an apprentice.
Supporting Eligible Younger Apprentices
Employers can receive an additional £1,000 when they take on an eligible apprentice who is aged 16 to 18, or aged 19 to 24 and has an Education, Health and Care Plan or has been in the care of their local authority.
New Apprentice Aged 16–24
From October 2026, eligible non-levy employers can receive a hiring payment of up to £2,000 when recruiting a qualifying new apprentice aged 16–24.
Levy or Non-Levy?
One of the first things to establish is whether your organisation pays the apprenticeship levy.
Levy-Paying Employers
Levy funds are held within the employer's Apprenticeship Service account and can be used towards eligible apprenticeship training and assessment costs.
From August 2026, the previous automatic 10% government top-up has been removed, and new funds entering an employer's account generally expire after 12 months if unused.
If levy funds run out
Government can fund eligible training and assessment costs up to the funding band maximum.
Government contribution, with the employer responsible for the remaining 25%.
Non-Levy Employers
Employers that do not pay the levy can still receive substantial government support towards eligible apprenticeship training and assessment.
Government funding can cover the full eligible training and assessment cost.
Government generally contributes 95%, with the employer paying the remaining 5%.
What Could 5% Co-Investment Look Like?
If an eligible apprenticeship has an agreed training and assessment price of £20,000 and the employer contributes 5%, the numbers would look like this:
What Isn't Covered by Apprenticeship Funding?
Levy or government funding supports eligible training and assessment. Employers still need to consider the wider costs associated with employing and developing an apprentice.
Wages
The apprentice's salary and normal employment costs.
Employment Costs
Employer National Insurance and pension contributions where applicable.
Equipment & PPE
Tools, equipment and Personal Protective Equipment required for the role.
Travel & Expenses
Any relevant travel or other employment-related costs.
Mentoring
Time spent by experienced employees supporting development.
Training Time
Internal time and resource required to develop workplace skills.
Wages Are One of the Main Employer Costs
An apprentice is an employee and must be paid at least the applicable National Minimum Wage.
The apprentice rate applies to apprentices who are under 19, and apprentices aged 19 or over who are still in the first year of their apprenticeship.
Apprentices aged 19 or over who have completed their first year must receive at least the minimum wage rate applicable to their age.
A more competitive salary can help attract stronger candidates, particularly in engineering and manufacturing roles.
Training, Mentoring and Managing Your Apprentice
The financial cost is only one part of a successful apprenticeship. Employers also need to invest time and expertise.
Experienced employees show apprentices how work is carried out.
Practical work may initially need greater oversight and support.
Apprentices benefit from guidance from experienced colleagues.
Responsibility can increase as the apprentice becomes more capable.
Off-the-Job Training
Apprentices must receive dedicated off-the-job training as part of their apprenticeship.
This takes place during the apprentice's paid working hours and develops the knowledge, skills and behaviours required for their occupation.
It does not simply mean sending the apprentice to college. Depending on the programme, it may include structured teaching, practical training, mentoring, shadowing, new equipment, processes or other relevant development activity.
of normal working hours, capped at an average of six hours per week under current guidance.
Crunching the Numbers
There isn't one single figure that represents the cost of employing an apprentice. The actual cost depends on several factors.
Age, salary and existing experience can affect both employment and training costs.
This determines how apprenticeship training is funded.
Age can significantly affect the level of government contribution towards training.
Each standard has a funding band which limits the amount of eligible funding available.
Consider supervision, mentoring and workplace development time.
Additional employer payments may help offset some costs.
Find Out What an Apprentice Could Cost Your Business
Engineering Trust Training can help you understand the funding available, identify the appropriate apprenticeship and work through the likely costs for your organisation.