Apprenticeship Funding Rules Explained
Understanding how apprenticeship funding rules work can feel overwhelming, especially if you’re an employer trying to navigate the world of training, budgets, and government guidance. That’s why at OTM Apprenticeships, we’re here to break it down simply and clearly.
In this blog, we’ll explain the key points you need to know about UK apprenticeship funding rules, including what’s available, who pays for what, and how employers can make the most of the system.
Whether you’re new to apprenticeships or expanding your training offer, this is your go-to guide to apprenticeship funding rules.
What Are Apprenticeships?
An apprenticeship is a paid job where the employee learns and gains valuable skills while working. Apprentices split their time between on-the-job training and structured learning, and they work towards a nationally recognised qualification, typically lasting between 12 – 48 months.
At OTM Apprenticeships, we deliver high-quality apprenticeship programmes across sectors like health and social care, education, business services, and early years, helping employers develop confident, capable teams ready to thrive.
Who Pays for Apprenticeships?
The cost of training and assessing an apprentice is covered either through the Apprenticeship Levy (for larger employers) or through co-investment (for smaller businesses). The government sets clear apprenticeship funding rules to determine how much is paid and by whom.
Let’s break that down:
1. Levy-Paying Employers
If your business has an annual pay roll bill of more than £3 million per year, you will pay the Apprenticeship Levy. This is charged at 0.5% of your payroll, and the money is held in a digital account (via the Apprenticeship Service) for you to use on apprenticeship training.
- You have 24 months to use the funds before they expire.
- You can only spend it on eligible apprenticeship programmes (like those delivered by OTM Apprenticeships).
- You can also transfer up to 25% of your levy funds to other businesses in your supply chain or region.
This is the most straightforward way to access apprenticeship funding for employers.
2. Non-Levy-Paying Employers
If your organisation doesn’t pay the levy, you will usually pay 5% of the total training cost, with the government covering the remaining 95%.
This is a fantastic way for small to medium-sized businesses to benefit from apprenticeship funding with minimal cost.
Example:
If the total funding band for an apprenticeship is £5,000, you pay £250 and the government pays the remaining £4,750.
Employers can also receive £1,000 in incentive payments if they take on apprentices aged 16–18 (or under 25 with an Education, Health and Care Plan).
3. Levy Transfer Funding
Levy-paying employers (those with payrolls over £3 million) can transfer up to 25% of their unused apprenticeship funds to non-levy-paying employers.
This allows smaller businesses to access apprenticeship training at no cost—the transferring employer covers 100% of the training and assessment costs, meaning there’s no charge to the receiving employer, apprentice, or government.
This is an excellent option for SMEs, charities, or startups looking to grow their team without the financial burden, and for larger employers who want to support their industry or local community.
What Can Apprenticeship Funding Be Used For?
According to the official apprenticeship funding rules, your funding can only be used to cover:
- Apprenticeship training from an approved provider (like OTM Apprenticeships)
- End-point assessment (EPA) by a registered organisation
- English and maths support (if required)
It cannot be used for:
- Apprentice salaries or travel
- Licences to practice (e.g. forklift licence, CSCS card)
- Costs of setting up an apprenticeship programme internally
- Training outside the apprenticeship standard
Need help understanding what’s included? OTM Apprenticeships can guide you through every step.
Key Employer Responsibilities
To use apprenticeship funding, employers must:
- Set up an account on the Apprenticeship Service (Manage Apprenticeships portal)
- Choose an approved training provider
- Agree on a price and payment schedule with the provider
- Support the apprentice with time for off-the-job training (minimum 6 hours per week)
- Provide a real job role relevant to the apprenticeship
- Work with OTM Apprenticeships to create an individual learning plan for each apprentice
These are all laid out in the current apprenticeship funding rules issued by the Department for Education.
Funding Bands & Maximum Values
Each apprenticeship standard is assigned a funding band, this is the maximum amount of government or levy money that can be used to pay for training and assessment.
For example:
Shorter Minimum Durations Now Possible
Recent updates to apprenticeship funding rules now allow for shorter minimum durations in certain cases.
Programmes can now last as little as 8 months (down from 12), as long as:
- The apprentice already has relevant prior learning or experience
- The programme includes at least 187 hours of off-the-job training
This creates opportunities for faster upskilling and quicker qualification for experienced employees—without compromising on quality.
Apprenticeship Duration & Off-the-Job Training
To qualify for apprenticeship funding, a programme must:
-
Include a minimum of 187 hours of off-the-job training
-
Meet the minimum duration requirements set out in the funding rules, this can now be as short as 8 months for apprentices with relevant prior learning and experience
Off-the-job training typically includes workshops, shadowing, online learning, or project work and it must take place during paid working hours.
At OTM Apprenticeships, we carefully map out these hours into every programme we deliver, ensuring your apprentice receives the right balance of learning and working time, while staying fully compliant with funding rules.
Fixed Off-the-Job Hours by Standard
Another key change to the apprenticeship funding rules is the move away from the old “20% of working hours” rule. Instead, each apprenticeship standard now has a fixed minimum number of off-the-job training hours that must be met.
These hour requirements are:
Providers like OTMA are responsible for ensuring these minimum hours are delivered, so you don’t have to worry about calculating percentages or tracking working patterns.
The Role of OTM Apprenticeships
As a registered training provider, OTMA works closely with employers to ensure full compliance with the apprenticeship funding rules and maximum return on your investment.
We provide:
- Advice on apprenticeship funding for employers
- Help setting up your Apprenticeship Service account
- Flexible delivery plans designed around your business needs
- End-to-end support from enrolment to end-point assessment
- Regular reporting to keep you up to date on progress
Our goal is to make the apprenticeship funding rules simple, clear, and actionable, so you can focus on developing your people.
Common Questions
Q: Can I train an existing employee?
Yes! Apprenticeships are open to both new and existing staff, as long as the learning is new and relevant to their role.
Q: Can apprentices be part-time?
Yes, but their programme will be extended to reflect fewer working hours.
Q: Do I pay National Insurance for apprentices?
If your apprentice is under 25 and earns below the threshold, you won’t pay employer NICs.
Q: What if the apprentice leaves early?
Funding stops, and any overpaid amounts may need to be repaid depending on timing.
Final Thoughts
Navigating apprenticeship funding rules doesn’t have to be complicated. With expert guidance from OTMA, you can access the right funding, choose the right programme, and see real results for your business.
Whether you’re a small business looking to grow or a large organisation wanting to invest levy funds wisely, our team is here to support you with clear, straightforward apprenticeship funding rules.
Ready to get started?
Contact OTM Apprenticeships today to find out how we can help you unlock the value of apprenticeship funding for employers and turn it into lasting impact for your business.
