Guidance

Apprenticeship funding

Updated 28 March 2024

Applies to England

Overview

This document sets out the policy for apprenticeship funding in England, for new starts from 1 April 2024.    

You should read it alongside:

• the  published funding bands for individual apprenticeship standards
• the apprenticeship funding rules that set out how this funding policy will work in practice and our expectations of employers and training providers

It is for:

• training providers who provide training for English apprenticeships
• organisations that provide end point assessment for English apprenticeships
• employers with a workforce in England
• individual apprentices

We fund apprenticeships using the apprenticeship funding rules in place on the date the apprenticeship started. This applies to all employers, both those who pay the apprenticeship levy and those who do not.

The exception to this are the funding rules relating to redundancy. The current apprenticeship funding rules, which describe the arrangements for any redundancy that occurs on or after 15 October 2020, will apply irrespective of the apprentice’s start date and will include existing learners who started their apprenticeship programme in previous funding years. 

Summary of updates

For new starts from 1 April 2024, where the employer does not pay the apprenticeship levy, the government will fund all of the apprenticeship training costs, up to the funding band maximum, for apprentices who are aged between 16 and 21 years old when they start their apprenticeship training.

From April 2024, the proportion of funds that levy-paying employers can transfer to other businesses will increase to 50%.

Funding bands

Employers choose the training they would like their apprentice to receive throughout their apprenticeship. All new starts must follow an approved apprenticeship standard.

Each apprenticeship standard is in a funding band. These funding bands range from £1,500 to £27,000. We expect employers to negotiate a price for their apprentice’s training and assessment, in the knowledge that the funding band sets the maximum that government is prepared to contribute towards the training and assessment for each apprenticeship.

We allocate standards a funding band based on recommendations from the Institute for Apprenticeships and Technical Education (IfATE). IfATE also reviews existing standards’ funding bands on a regular basis. New standards are allocated a funding band once IfATE has approved them for delivery.

The funding band sets the maximum amount of apprenticeship funds that:

• an employer who pays the levy can use towards an individual apprenticeship from their apprenticeship service account
• the government will co-invest towards the apprenticeship where an employer:
  • does not pay the apprenticeship levy
  • has insufficient funds in their apprenticeship service account

Costs above the funding band

We expect that all employers must meet, in full, any costs above the funding band limit for any apprenticeship, which are agreed by the employer and provider.  They will need to make these payments directly to the training provider.

Apprenticeship provider and assessment register

We will only make payments to a provider if they are on the approved apprenticeship provider and assessment register. This includes where the provision is subcontracted from one provider to another.

Any exceptions to this can be found within the apprenticeship funding rules.

Funding apprentices who work in England

The apprenticeship funding rules explain which individuals we will fund for an apprenticeship through the English system.

We will fund apprenticeship training where the apprentice’s workplace, which is their main place of employment, is in England. If this is the case, employers can:

• use the funds in their apprenticeship service account to pay for training and assessment
• access government co-investment

This is regardless of whether the apprentice lives in England or not. However, the apprentice must:

• be taking an English statutory apprenticeship
• meet all other learner eligibility rules

We define the workplace as the physical place of work, designated by the employer. It is where the employer expects the apprentice to spend most of their time during their apprenticeship (50% or more). Employers must confirm the workplace location as part of their written agreement with the training provider, in the evidence pack for each apprentice. Any exceptions to this can be found within the apprenticeship funding rules.

We require apprentices to have the right to live and work in the UK for the duration of their apprenticeship. Detailed information can be found in Annex A of the apprenticeship funding rules.

Scotland, Wales and Northern Ireland have their own arrangements for supporting employers to access apprenticeships.

Funding apprentices with prior qualifications

Employers can use funds in their apprenticeship service account, or access government co-investment support, to train any eligible individual to undertake an apprenticeship. The apprenticeship can be at a higher, equal or lower level than a qualification they already hold, including a previous apprenticeship if:

• it allows the individual to acquire substantive new skills
• the content of the training is materially different from any prior training or previous apprenticeship

Providers must consider all relevant prior learning and experience when assessing learner eligibility. They should adjust the content, duration and price of the apprenticeship where applicable.

Funding end-point assessment

All apprenticeship standards include end-point assessment, which must be delivered by an independent end-point assessor. The funding band allocated to an individual standard includes the cost of end-point assessment, as well as the cost of the training.

The cost for assessment will vary between standards. We expect providers or employers (if they have chosen to undertake this role) to negotiate with assessment organisations to secure value for money. We expect that the cost of end-point assessment should not exceed 20% of the funding band maximum.

Employers who pay the apprenticeship levy

Employers access government funding for apprenticeships through their apprenticeship service account. The amount of funding that an employer paying the apprenticeship levy can access is linked to:

• the value of their levy contributions
• the proportion of employees living in England
• a government top-up

We calculate the amount of funds each employer will have available to spend in England using data that HMRC holds about the home address of employees. HMRC works out the proportion of each employer’s pay bill that is paid to employees living in England for each PAYE scheme.

Employers continue to receive a 10% top up to monthly funds entering an account. The level of funding that enters an employer’s account each month is:

• monthly levy paid to HMRC
• multiplied by the proportion of the pay bill paid to the workforce living in England
• plus a 10% government top-up on this amount

When an employer first sets up an account on the apprenticeship service, funds will enter their account immediately. We base these funds on the employer’s valid levy declarations to HMRC to date, up to a maximum of 2 years in arrears. After this, funds will enter accounts monthly.

Availability of funds in accounts

Employers can:

• spend their funds on their own apprenticeship training and assessment costs
• transfer them to another employer

After 24 months, funds become unavailable to use and are removed from accounts. This is so levy-paying employers cannot accrue large balances, with the potential to create financial commitments that the government has not planned to meet.

The oldest funds remaining in an account will be removed each month on a ‘first-in, first-out basis’. This will minimise the potential for funds to be removed. For example, if in the latest month, the employer spends the same or more than the funds that entered the account 24 months earlier, no funds will be removed.

We do not anticipate that all employers who pay the levy will need or want to use all of the funds in their accounts, but they are able to. Any unused funds, including those that are removed from accounts, support:

• new starts with non-levy paying employers
• new starts with levy paying employers who spend more than the funds available in their accounts
• existing apprenticeship learners

Transfers

Employers can transfer unused funds in their account to any number of other employers, for any number of apprenticeships. They can transfer up to the annual maximum transfer allowance of 50%. For example, employers could transfer funds to other employers in their supply chains or work with regional, local or sector partners.

Employers can transfer unspent levy funds to other employers via the online pledge function within their apprenticeship service account. Employers can specify the amount of their funds available for transfer. They can also define the criteria of the apprenticeship they wish to support.

This pledge is then advertised on search funding opportunities. This enables other employers, training providers and intermediary bodies to see what opportunities are available. Potential receiving employers will be able to apply for these pledges via their apprenticeship service account.

Alternatively, if an employer already knows who they want to send a transfer to then this can be done via a direct transfer connection.

Receiving employers can use transferred funds to pay for the training and assessment cost (up to the funding band maximum) of their apprenticeship. The sending employer and the receiving employer need to agree the details of the transfer, for example:

• which apprenticeship standards
• how many apprentices
• the training and assessment costs

This can be done either via a direct transfer connection or an approved pledge application. The transfer amount should cover 100% of the eligible training and assessment costs, up to the funding band maximum of the apprenticeship.

By agreeing to fund an apprenticeship with a transfer, the sending employer is committing to fund the apprenticeship over its entire duration until completion. They will need to ensure that they will have enough transfer allowance to cover these costs over the relevant number of years.

The sending employer will not be able to stop payments once they have approved the apprenticeship on the apprenticeship service. We will deduct transfer payments from their levy account first, before to their own apprenticeships.

If you are a sending employer with existing transfer commitments, you will also be able to receive transferred funds to take on new apprenticeship starts.

Employers need to take account of subsidy control rules when receiving funds from other organisations. A percentage of all the funds received as a transfer may fall within the scope of subsidy control. This represents the amount of co-investment that the employer would otherwise have had to contribute towards the apprenticeship if they had not received funds.   

For starts funded through a transfer, 5% may fall within the scope of subsidy control. For further information on subsidy control, contact the UK Subsidy Control Team at the Department for Business and Trade.

Employers who do not pay the apprenticeship levy

Employers can benefit from  significant government funding to support their commitment to apprenticeships if they:

• do not pay the levy
• want to invest more in apprenticeship training and assessment than they have available in their apprenticeship service accounts

These employers must make a financial contribution, called a ‘co-investment’, alongside this government funding. This cash contribution towards the cost of training, by the employer, is essential to increase quality and employer engagement. Employers make their co-investment payments directly to the training provider.

The current rate of co-investment is 5% of the total price of the apprentice’s training and assessment costs (up to the funding band maximum). The government covers the remaining 95% of the cost.

Any exceptions to this can be found within the apprenticeship funding rules.

Reservation of funds

Employers who do not pay the apprenticeship levy can access funding by:

• creating accounts on the apprenticeship service
• reserving funding to cover the costs of apprenticeship training and assessment

Employers can also give their training provider permission to reserve funds on their behalf. Reservations provide certainty that the government will pay for the apprenticeship. They also help manage the availability and affordability of apprenticeship funding for non-levy paying employers.

We will continue to monitor the number of reservations used and will keep this under review. We may pause reservations within the financial year to ensure that the programme remains affordable.

Employers can reserve funds up to 3 months before an apprenticeship is planned to start. Where this is not possible, they can reserve funds within one  calendar month of the apprenticeship starting.

Each reservation will expire 2 months after the reservation month (a total of 3 months) if the apprenticeship details are not completed and fully approved on the service. For example, in May 2024 employers will be able to reserve funds three months in advance for a start in July 2024. If the apprenticeship details are not completed and fully approved by 30 September 2024 it will expire. Employers can delete reservations they no longer need.

Once a reservation has been made, we guarantee funds for that apprenticeship. This is subject to:

• the apprenticeship details being completed and fully approved, known as turning the reservation into a commitment
• meeting the other eligibility criteria in place when the apprenticeship starts, as detailed in the apprenticeship funding rules

Where the apprenticeship is being funded via a transfer of funds, this does not require a reservation to be made.

Payments to providers

We pay providers when they have evidenced delivery of training and assessment activities through their monthly individualised learner record. At the start of the apprenticeship, the provider will indicate how long they expect the apprenticeship training to last before successful completion.

We make monthly payments totalling 80% of the negotiated price (up to the funding band maximum). We spread these evenly across the practical period of the apprenticeship. We pay the remaining 20% at the end of the apprenticeship upon the apprentice’s completion of the end-point assessment.

Additional payments 

Funding is available for employers, providers and apprentices, to help those who may need additional support in the workplace.

Additional payments for employers

Employers will get an extra £1,000 when they take on an apprentice:

• aged 16 to 18
• aged 19 to 24 who has either:
  • previously been in care
  • an education, health and care plan

This is to help with additional costs associated with supporting them in the workplace.

We will pay this to employers in 2 equal instalments, at 90 days and 365 days. We make the payments to employers via their training provider, who will pass the money on.

These payments will not be deducted from an employer’s apprenticeship service account. Employers who benefit from the employer co-investment exemption will also receive these payments.

Additional payments for providers

We recognise that providers face some additional costs associated with training younger learners and those that need additional support.

Providers will get an extra  £1,000 payment for supporting apprentices aged:  

• 16 to 18
• 19 to 24 who have either:
  • previously been in care
  • an education, health and care plan

We pay this over 2 equal instalments at 90 days and 365 days. This is on top of the funds that providers receive for training. It does not come from employer accounts.

Additional payments for individuals

We understand that care leavers can face additional financial barriers in undertaking an apprenticeship.

Apprentices aged 16 to 24 who have been in the care of their local authority can get a bursary of £3,000. This is to help ensure they can access apprenticeships.

We will pay this bursary in 3 equal instalments and it will not come from the employer’s apprenticeship service account. We will pay it to eligible apprentices, via their training provider.