Do employers pay for apprenticeships?

Apprenticeships can be a fantastic way to start a career, earning as you learn under the tutelage of a professional mentor. Although not often associated with non-trade-based jobs, this includes professions in the financial advice industry. However, how do financial service apprenticeships work from a funding point of view? Do employers have to fully pay for the apprentices they take on? And what is the apprenticeship levy here in the UK? 

Carry on reading for answers to all of these questions and more. 

Do employers pay for financial services apprenticeships?

Yes – employers do contribute to the cost of apprenticeship training, but since April 2019, the rate of employer contributions towards apprenticeships has been significantly reduced, with many businesses only required to pay 5% towards the training and pay of the apprentices they take on.

This is because the amount businesses pay toward their apprentices training depends on whether they are levy-paying or non-levy-paying employers. The apprenticeship levy is a tax on large employers with a pay bill exceeding £3 million per year, calculated at 0.5% of their total payroll. These funds are then used to finance apprenticeship training through a digital apprenticeship service (DAS) account.

For the majority of smaller, non-levy-paying employers, the financial burden is much lighter. They are only required to pay just 5% of the training costs, with the government contributing the remaining 95%. This co-investment model is designed to make apprenticeships a viable and cost-effective option for businesses that may not have the financial capacity of larger corporations.

This is great news for employers, creating an attractive incentive to use apprenticeships to boost the skill set of their employees and help their businesses grow with only a minimal cost to them. An apprentice can be recruited, helping employers obtain fresh talent, or an existing employee can be put on to programme, giving someone who understands how your company works a helping hand to upskill and ultimately improve your business. Indeed, for smaller companies who do not pay into the levy fund, this reduction in contribution makes the possibility of developing a strong skilled, highly qualified workforce more realistic.

How much do employers pay for apprenticeships?

This is a ‘how long is a piece of string?’ question. The actual amount that employers pay for apprenticeships naturally varies based on the type of employer and the specific apprenticeship programme. However, as outlined above, in terms of percentages of the final cost, the amount will depend on whether the business in question is a levy-paying employer or not. 

Levy-paying employers will need to draw from their levy contributions to cover the full cost of apprenticeship training and assessments. Only if the costs exceed their levy contributions, will they pay 5% of the excess, with the government covering the rest.

On the other hand, non-levy-paying employers – remember, this is any employer with a payroll under £3 million per year – benefit from the government’s co-investment model. This means they only pay 5% of the total training costs of the apprenticeship, with the UK government funding the remaining 95%. For example, if a mortgage adviser apprenticeship costs £10,000, the employer would pay just £500, with the government covering £9,500.

It’s also worth noting that some employers might qualify for full funding. For example, employers with fewer than 50 employees who take on apprentices aged 16 to 18, or those aged 19 to 24 who have been in care or have an Education, Health, and Care Plan (EHCP), do not have to pay any apprenticeship training costs. The government fully funds these apprenticeships.

How Simply Academy can help

Simply Academy are specialists in financial training and apprenticeships with a wealth of industry knowledge and expertise. Not only do we provide expert training to complete our industry recognised apprenticeship programmes, but we also help with recruitment and funding to ensure your apprentice becomes a fully qualified, invaluable member of your organisation.

For more information on the funding reduction, or to start the apprenticeship process for your business, please contact our expert team – [email protected] or call 0808 208 0002 (freephone).