In today’s competitive business landscape, organisations are constantly seeking ways to develop talent while managing costs effectively. Apprenticeships have emerged as a powerful solution, offering a structured pathway to build skills within a workforce. However, a common question arises: Do employers get paid for having an apprentice?
Here at Damar, we’re committed to making apprenticeships accessible for employers. And, in this blog, we’ll directly address your questions about whether employers get paid for having an apprentice, providing a clear breakdown of the funding process and how your organisation can benefit.
Do employers get paid for taking on an apprentice?
The short answer is no. Employers do not receive regular payments for taking on an apprentice. Apprenticeships represent an investment in future talent, with the apprentice being an employee who receives training while contributing to the organisation. However, the government recognises the value of apprenticeships to the economy and offers various financial incentives and support mechanisms that can make apprenticeships highly cost-effective for businesses of all sizes.
National insurance contribution exemptions
One of the most substantial financial benefits for employers comes in the form of National Insurance (NI) contribution exemptions. Many employers are unaware that they are exempt from paying employer NI contributions for apprentices under 25 years of age. This exemption applies to both newly recruited apprentices and existing staff members placed on apprenticeship programmes.
The savings can be considerable. An employer with an apprentice earning £20,000 annually can save approximately £2,250 in NI contributions each year until the apprentice turns 25. For those on a £25,000 salary, the annual saving increases to around £3,000.
This exemption applies as long as the apprentice is under 25 and earns less than £967 per week. For businesses looking to manage costs while developing talent, this represents a significant financial advantage that partially offsets the investment in the apprentice’s salary.
The minimum wage for apprentices
Another financial consideration for employers is the apprenticeship minimum wage. The government sets a specific minimum wage for apprentices, which is typically lower than the standard minimum wage for other employees. As of April 2025, the apprentice minimum wage stands at £7.55 per hour for apprentices under 19 years of age or those in the first year of their apprenticeship.
After completing the first year, apprentices aged 19 or over are entitled to the national minimum wage for their age group. This graduated wage structure allows employers to manage payroll costs during the initial training period when apprentices may require more supervision and contribute less to productivity.
However, it’s worth noting that many employers choose to pay above the apprentice minimum wage to attract higher calibre candidates and improve retention rates. The wage structure should be viewed as a starting point rather than a recommendation, with the best approach being to offer competitive compensation that reflects the value apprentices bring to the organisation.
Government funding for apprenticeship training
While employers don’t get paid directly for having apprentices, the government provides substantial funding for apprenticeship training costs. The funding model varies depending on the size of the organisation:
For small and medium enterprises (SMEs)
SMEs with an annual wage bill under £3 million are classified as non-levy employers and benefit from significant government co-investment in apprenticeship training:
- For apprentices aged up to 21, the government funds 100% of the apprenticeship training costs (excluding any non-eligible accreditation costs)
- For apprentices aged 22 and over, the government covers 95% of the training costs, with the employer contributing just 5%.
This means that SMEs can access high-quality training programmes with minimal financial outlay, making apprenticeships an extremely cost-effective talent development strategy.
For larger organisations
Larger organisations with an annual UK payroll exceeding £3 million pay the apprenticeship levy, set at 0.5% of their total payroll. This money is collected through PAYE and deposited into a digital apprenticeship account, which employers can then use to fund apprenticeship training.
The levy system includes several features that enhance its value:
- The government provides an automatic 10% top-up to the funds in the digital account, effectively turning every £1,000 of levy contribution into £1,100 of training funds.
- Employers receive an allowance of £15,000 to offset against their annual levy contribution, meaning that only organisations with payrolls exceeding £3 million actually pay into the system.
- Funds remain available in the digital account for 24 months, giving employers flexibility in how and when they utilise their apprenticeship funding.
For levy-paying organisations, maximising the use of these funds represents a significant opportunity to recoup from their levy pots. By implementing strategic apprenticeship programmes, these employers can transform the levy from a cost into an investment with tangible returns. If you’re unsure what the apprenticeship levy is, have a read of our blog: What is the apprenticeship levy?
Are there grants for young apprentices?
Yes, employers who recruit apprentices aged 16-18 can receive a £1,000 grant. This additional payment recognises the extra support that may be required for younger apprentices entering the workforce for the first time.
For a non-levy paying employer recruiting a 16-18 year old apprentice on an £18,000 salary, the combined benefits are substantial: Approximately £1,950 in annual NI savings, fully funded training costs, and the £1,000 grant. This creates a compelling financial case for bringing young talent into the organisation through apprenticeships.
The broader business benefits
While the financial incentives are significant, the true value of apprenticeships extends far beyond immediate cost savings. Employers who implement effective apprenticeship programmes report numerous business benefits that contribute to long-term financial performance:
Addressing skills shortages
Apprenticeships allow employers to develop talent specifically aligned with their organisational needs. This targeted approach to skills development helps address critical skills gaps and reduces recruitment costs for hard-to-fill positions. By moulding the next generation of talent, businesses can ensure they have the capabilities needed for future growth.
Stacey Lawrence, Data Protection Manager at Manchester Airport Group, said: “The impact that the data protection apprentices have had has been huge. They have managed enquiries, data protection processes, and individual rights requests, and without them, we simply wouldn’t be able to do the really sterling work that we get to do every day.”
Increased productivity
Research consistently shows that apprentices contribute to improved productivity. As they learn from experienced team members and apply their training directly to workplace challenges, apprentices bring fresh perspectives and innovative approaches. The structured nature of apprenticeship programmes ensures that learning is immediately relevant to business needs.
Sasha Ivanova at NEC Europe told us: “Our accounting apprentices have significantly enhanced our organisation’s productivity by providing fresh perspectives and dedicated support to our financial operations, and contributing to improved accuracy and streamlined processes.”
Enhanced retention and loyalty
Employees who complete apprenticeships typically demonstrate higher levels of loyalty to their employers. The investment in their development creates a strong psychological contract, reducing turnover costs and preserving institutional knowledge. Many organisations report that former apprentices progress to leadership positions and remain with the company for significant portions of their careers.
Lynette Smith, Senior Learning & Development Business Partner at Brabners, said: “The paralegal apprenticeship provides a culture of learning and development for our ambitious colleagues and promotes progression in our organisation. It allows us to retain talent and supports one of our values – making a difference for our colleagues.”
Diversity and fresh perspectives
Apprenticeships can help diversify the workforce, bringing in people from different backgrounds and age groups. This diversity of thought and experience can drive innovation and improve decision-making. Older apprentices bring valuable life experience and transferable skills, while younger apprentices offer digital nativity and fresh perspectives.
Tracey Wilson, Operations Director at Blue Cube Travel, said: “Offering apprenticeships demonstrates our commitment to career development and employee growth. Apprenticeships contribute to a dynamic and inclusive workplace culture. The integration of enthusiastic, motivated apprentices energises the team, promoting a collaborative and supportive environment that benefits all employees.”
How to maximise the financial benefits of apprenticeships
To fully realise the financial advantages of apprenticeship programmes, employers should consider several strategic approaches:
Align apprenticeships with business needs: The most successful apprenticeship programmes address specific organisational challenges or opportunities. By identifying areas where skills development can drive business performance, employers can ensure that their investment in apprentices delivers tangible returns.
Integrate apprenticeships into workforce planning: Rather than viewing apprenticeships as stand-alone initiatives, forward-thinking organisations integrate them into broader workforce planning. This approach ensures a pipeline of talent for key roles and supports succession planning at all levels.
Partner with specialist training providers: Working with experienced training providers like our team here at Damar Training can help employers navigate the funding landscape and design programmes that maximise both financial benefits and skills development. These partnerships provide access to expertise in apprenticeship design and delivery, enhancing the return on investment.
How Damar Training can unlock the financial value of apprenticeships
Hopefully, this blog has answered your question: ‘Do employers get paid for having an apprentice?’ However, the question shouldn’t be whether employers get paid for having apprentices, but rather how they can structure apprenticeship programmes to maximise the substantial financial and business benefits available. With the right approach, apprenticeships represent not a cost but an investment with significant returns for organisations of all sizes.
Here at Damar, we’re truly passionate about the delivery of apprenticeships, and we’ve got over 40 years of experience under our belt. We focus on business and professional services apprenticeships, working nationally with organisations of all sizes to create long-term value and increased productivity.