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Hiring an apprentice gives employers the chance to train new employees and to help people find a new career. Some employers may see hiring an apprentice as a good way to save money, but it's important to understand the costs involved in taking on an apprentice. In addition to the apprentice's salary, there are several other costs that need to be considered.

Employers can benefit from funding from the Education and Skills Funding Agency (EFSA) to support the costs of training for their apprentices.

Apprentice Recruitment Costs

The first cost to consider when employing an apprentice is the cost of finding the right person. Recruitment costs always need to be taken into account when looking for new employees, but there are some advantages when hiring an apprentice.

You can make use of several channels to advertise the apprenticeship at no cost or in a way that will help you save money.
The official apprentice recruitment site from the government is one way to advertise apprenticeship vacancies for free. When working with a training provider, they can use this service to post vacancies and manage applications. The apprentice will be recruited, interviewed and put forward to you for the role. You could also use other job sites to advertise apprenticeship posts if you wish.

Training Costs

Offering an apprenticeship means ensuring the apprentice receives training and education alongside their employment. At least 20% of the apprentice's time should be spent on off-the-job training, so working with a training provider can be a smart choice. Funding for training can be secured from the EFSA, but eligibility depends on whether the employer pays the apprenticeship levy. Only about 3% of all employers pay the levy, as it is payable by those with an annual wage bill of over £3million, as well as employers connected to any companies or charities for Employment Allowance purposes that have a combined annual pay bill of more than £3million.

The apprenticeship levy is charged at 0.5% of the annual bill. The Apprenticeship Levy Allowance reduces the amount payable by £15,000 across the year. Levy-paying employers can access some or all of what they pay to fund an apprenticeship to employ apprentices in England. How much they can access depends on their levy contributions and the proportion of employees living in England. They also receive a government top-up of 10% to monthly funds.

apprentice cost

Employers that don't pay the levy share the cost of training with the government (co-investment). Apprentices are placed in one of 30 funding bands, which range from £1,500 to £27,000. The upper limit of each band is the maximum that the government will co-invest in the apprentice's training. Funds can be reserved up to three months in advance of the planned start of the apprenticeship. Employers are expected to pay 5% of the training costs, while the government will cover the remaining 95%. Some small employers are not required to pay for funding costs. Employers with fewer than 50 employees can train apprentices aged 16-18 or apprentices aged 19-24 who have been in care or who have an Education, Health, and Care plan at no cost. The government will cover 100% of the training costs in these cases. Employers also receive £1,000 extra funding for apprentices when employing people in these circumstances.

Salary, Taxes, and Workplace Benefits

Finally, employers will need to consider the costs of paying their apprentice, as well as associated expenses. From April 2022, the National Minimum Wage for apprentices will be £4.81 per hour. This applies to apprentices aged under 19 or those 19 or over and in the first year of their apprenticeship.

Apprentices aged 19 or over with an apprenticeship lasting more than a year are entitled to the minimum wage or National Living Wage corresponding to their age from the second year of the apprenticeship. Apprentices are also entitled to the same benefits as employees doing a similar job or at a similar grade. This includes all statutory rights, as well as a workplace pension, any additional workplace benefits, and redundancy rights.

Employers may not need to pay Class 1 National Insurance contributions for apprentices if they are under 25, on an approved apprenticeship standard or framework, and earn less than £967 per week. Employers need to provide evidence to gain national insurance relief when hiring apprentices. Hiring an apprentice involves several costs, but employers can benefit from government funding that helps to pay for training. Make sure you're aware of the costs involved when setting up an apprenticeship.

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