Recognising the value that apprentices bring to the economy, the Government’s Plan for Jobs includes updates to apprenticeship funding policy, with incentive payments for employers who hire new apprentices before the end of January 2021.

The purpose of these incentives is to support employers to build capacity and capability following the disruption of Covid-19, while creating high quality opportunities for individuals and equipping them with skills that are in demand. We’ve put together a set of FAQs to explain how the apprenticeship incentives will work and how your business can benefit from them.


1. Who can access the new government incentive payments?

The incentive payments apply to employers with a workforce in England who recruit an apprentice between 1 August 2020 and 31 January 2021. Provided the eligibility criteria are met, there will be no limit on the number of incentive payments you can claim.


2. What payments am I entitled to?

There will be two levels of payment based on age:

  • £2,000 for an apprentice aged 16-24
  • £1,500 for an apprentice aged 25 or over

3. What are the eligibility criteria?

The eligibility criteria for these payments are as follows:

  • The apprentice must be a new employee to the business
  • The apprentice must have a contract of employment with a start date between 1 August 2020 and 31 January 2021 (inclusive)
  • The apprentice must not have been employed by the business within the six months prior to the contract start date

4. Do these incentives replace the additional payments already available for young apprentices?

No. Incentive payments are separate from – and therefore in addition to – payments that are currently available to help cover the costs associated with training a 16-18 year old apprentice, or an apprentice aged 19-24 who has previously been in care or has a Local Authority Education, Health and Care Plan (EHCP).

Employers who recruit young apprentices in one of the above categories will continue to receive £1,000 in addition to the incentive payments. This means you could be eligible to receive up to £3,000 for each new apprentice you recruit.


5. When will I receive these payments?

You can claim these incentive payments from 1 September 2020. Claims must be made through the apprenticeship service, so make sure you have an account set up.

The payment will be made directly to you in two equal instalments, where the apprentice is still in learning at day 90 and day 365.


6. What if my apprentice has prior qualifications?

As long as the individual gains substantive new skills, and the content of the training is materially different from any previous training or apprenticeship, they can undertake an apprenticeship programme at a higher, equal or lower level than the qualification they already hold.

All prior learning will be considered when assessing eligibility, but apprentices with existing qualifications will not be excluded from the payment of incentives.


7. I don’t pay the apprenticeship levy. Is there funding available for my business to train apprentices?

Even if you don’t pay the apprenticeship levy you can now create an account on the apprenticeship service and reserve government funding to cover 95% of the cost of apprenticeship training and assessment. The change – which came into effect in January 2020 – is a move away from government-procured contracts, and means you have greater control and flexibility over your apprenticeship choices.

For the rest of the financial year 2020-21, the number of reservations available to you on the apprenticeship service at any given time will increase from 3 to 10, so you’ll be able to access more funding for apprentices in this way.

Although most non-levy paying employers contribute 5% towards the cost of their apprentices’ training and assessment (known as co-investment), this fee is waived for businesses with fewer than 50 employees, as long as:

  • Apprentices are aged 16-18
  • Apprentices are aged 19-24 and have previously been in care or have a Local Authority Education, Health and Care Plan

8. We pay the apprenticeship levy but struggle to spend it in full. How can we use it to make the most of government incentives?

 If, like many employers, you have a levy underspend, and have accumulated excess funds in your apprenticeship service account, now could be the right time to take advantage of your apprenticeship levy to build capacity and capability within your business.

Why not consider:

  • Talent programmes

With school and college leavers entering the labour market for the first time under very difficult circumstances, your business has the opportunity to hire talented individuals with the motivation to learn and grow as they build the skills that they – and you – will need to succeed in the months and years ahead.

Intermediate and advanced apprenticeship programmes can help young people access the first rung of their career ladder and deliver a pipeline of talent into your business. Some may even be ready to access higher or degree apprenticeships at levels 4 and above.

  • Graduate schemes

Graduates are likewise facing a difficult journey into employment as they complete their academic studies and consider their next steps. Many students leave university without relevant work experience, so the opportunity to develop vocational skills through on- and off-the-job training benefits both the employer and the employee.

Apprenticeships can support graduates – or individuals who already have some relevant experience and qualifications – to successfully build a career while enabling businesses to plug skills gaps and increase capacity and productivity.

  • Transfer of funds

If you are unlikely to spend your levy allocation in full you can transfer up to 25% of unused funds to another employer. For example, you could fund apprenticeships for organisations in your supply chain or work with local, regional and sector partners, which has wider benefits for your industry and local communities.

Businesses in receipt of transferred funds will be eligible to receive incentive payments.


Employer Guide: Apprenticeships for Recovery and Growth

For more information about the apprenticeship incentives, and how changes to apprenticeship funding policy will benefit levy and non-levy paying employers, download our latest guide: Apprenticeships for Recovery and Growth.

Access here


Our consultants are on hand to answer any further questions you have and support your business to build capacity and capability through apprenticeships. For more information about government grants and incentives please contact us and we’ll be in touch.