Ever considered taking on an apprentice? Or already offer apprenticeships and traineeships in your business? If so, we have some good news for you, in the form of cold, hard cash.

In the March 2021 Budget, the UK Government announced refreshed incentive schemes which encourage employers to take on new trainees and apprentices. It’s all to help kickstart the economy, reduce unemployment and improve job prospects in the wake of the COVID-19 crisis.

Before we get into the ins and outs of these new apprenticeship incentive schemes though, an important note.

 
Many of these new incentives are time-sensitive as part of a broader coronavirus response package by Chancellor Rishi Sunak. This means you could have just months to apply, so act fast if this support is for you.

We’ll cover everything you need to know about accessing the schemes near the end of this guide, including a handy list of deadline dates for your calendar.

New employer incentives for apprenticeships – what’s been announced?

In the most recent Budget, the Chancellor announced a financial bonus for eligible employers taking on new apprentices. From 1st April 2021, your business will receive £3,000 for each new employee you take on as an apprentice.

This is an enhanced version of the previous incentive, which was available between August 2020 and the end of March 2021. Under that scheme, you could only get between £1,500 and £2,000 depending on the age of the apprentice.

 
Crucially, this new incentive is on top of the £1,000 per apprentice that employers already get from the government for offering apprenticeships. This means you could net up to £4,000 from the government, and have all the benefits of an apprentice, too.

Important – you need to get your apprentices on board by September 2021

If you’ve been considering taking on an apprentice but haven’t yet taken the plunge, don’t delay. This boosted incentive payment is only valid for apprenticeships which start between 1st April and 30th September 2021.

We don’t yet know whether the increased sum will stick around, but it’s most likely a short-term measure introduced to help with post-COVID recovery. The incentive payment could drop back down to previous levels, or perhaps even drop lower (although this is unlikely).

Can I claim an incentive payment for apprentices taken on in 2020?

The government has increased the incentive payment for apprenticeships starting between April to September 2021, but you can still apply for apprentices taken on last year. The deadline to request incentive payments for apprenticeships which began between 1st August 2020 and 31st March 2021 is 31st May 2021. Crucially, this will be at the lower amount of:

• £2,000 for apprentices aged between 16 and 24 years old.
• £1,500 for those aged 25 or over.

 
Unfortunately, you can’t claim for apprentices who joined your organisation earlier than 1st August 2020. This includes existing employees, who were in the role before the August deadline but only embarked on an apprenticeship after it.

What can I spend the incentive payment on?

Some support schemes for apprenticeships require businesses to spend grants and payments on very specific things. For example, business recipients of the Apprenticeship Levy Fund must use the money for apprenticeship training.

The employer incentive payments for apprenticeships have no such restrictions. In fact, you can use it on pretty much anything that supports your costs for taking on an apprentice. So, you might spend it on the apprentice’s salary, uniform, work tools or travel expenses.

Do I need to put my apprentice through PAYE?

Yes, your apprentice should be treated the same as any other employee when it comes to tax and National Insurance, which usually means including them as part of your PAYE obligations.
 

New business incentives for taking on trainees

Another key update for employers in the March 2021 budget related to traineeships. These will also be getting a boost, also in the form of an attractive incentive payments for employers.

Traineeship funding has been around for a while. The Education and Skills Funding Agency (ESFA) already fund traineeships for eligible candidates aged between 19 and 24.

How much funding is available for employer-based traineeships?

The government has now announced that it’ll be offering employers a brand new £1,000 per learner for making new traineeship work placement opportunities available.

The precise details are not yet fully available, but it appears you’ll be able to claim £1,000 per person, for as many as 10 trainees.

Providing a meaningful training programme

Whilst traineeships may be free in terms of wage costs, employers are encouraged not to see it as an opportunity for some free labour. Instead, you will need to provide a meaningful, high-quality work experience for each learner, ensuring they get at least 70 hours of work experience over the course of the year.

You’ll also need to think about travel, meals, uniforms, PPE and equipment, health and safety, providing constructive feedback and much more. Plus, you’ll need to work with the training provider to plan a programme that works around the training and the needs of your business.

It might be that the traineeship is shared amongst a group of employers, giving the trainee more experience, and allowing greater flexibility for the business. In short, there’s a lot to think about.

How to access the new incentive schemes

Ready and raring to take on an apprentice or trainee? Let’s take a look at how to access the incentive payment for each scheme.

Apprenticeships

Whether you’re claiming for apprentices who started between August 2020 and March 2021, or the new incentive scheme, you’ll need to set up an apprenticeship service account.

This account not only gives you access to apprenticeship funding, it will help you to recruit apprentices, find training providers and manage your apprenticeships.
 

To create an apprenticeship service account

• Register with HMRC and submit your first payroll data (if you haven’t already).
• Let HMRC know you’re planning to take on an apprentice.
• Register for an account using your company’s Government Gateway sign in details.
• Link your account with every organisation which will make an agreement with your training provider.
• If you have extra time to spare, you can go onto invite employees to join the account and set different levels of access.

Once you’ve signed up your apprentices and added their details to your account, you can apply for the incentive payment. You only have until May 2021 to do this for last year’s apprentices.

Traineeships

The government hasn’t yet released the information on how to get the new £1,000 incentive payment for traineeships. However, there’s nothing to stop you embarking on the process of offering a trainee work placement. Similar to the apprenticeship incentive scheme, you’re likely to be able to apply for the incentive for at least a few months.

While you wait for the official guidance to come through, you can take the first few steps towards taking on a trainee. The government’s Apprenticeships website offers reliable and detailed advice for employers. They’ll let you know exactly what you need to do to set up your traineeship

Alternatively, you can find a local training provider and design your programme in collaboration with them. They’ll even publicise it for you, so you don’t have to worry about getting potential trainees to sign up.

When will I receive payment?

Unfortunately, there are lots of background checks and paperwork to sort out. This means that you could have to wait up to three months to receive your first payment.

On that note, it’s useful to know that employer incentive payments for apprenticeships are split into two equal instalments. You’ll get your first one after your apprentice has completed 90 days of their apprenticeship, and that’s only if the government has completed all of its verification checks of your company and its financial details.

For the second payment, you’ll be waiting at least a year before you receive the money. Plan ahead for what this might mean for your cash flow!

Important deadline dates for your calendar

We’ve already mentioned that the window for taking advantage of the new supercharged employer incentive payments is quite tight. To make extra sure you don’t miss out, here are the most important deadline dates for your calendar. Jot them down now, and set plenty of reminders!

• 31st May 2021 – the deadline to apply for an incentive payment for new apprentices taken on between 1st August 2020 and 31st March 2021
• 1st June 2021 – the date you can start to apply for apprentice incentive payments (for apprenticeships starting from 1st April 2021)
• 30th September 2021 – the deadline for hiring new apprentices, to be eligible for the new £3,000 incentive payment.

The pros and cons of apprenticeships for your business

The new £3,000 incentive, on top of the existing £1,000 payment is an obvious perk, but what else could an apprentice or trainee do for your business? Let’s round off by taking a quick look at the pros and cons.

Cost effectiveness

Apprentices generally have a much lower entry salary than permanent employees, because they have a lower level of skills and experience to offer the business. Plus, they benefit from the chance to learn valuable new skills on the job.
 

Bridging skills gaps

Apprenticeships present a valuable opportunity for businesses looking to grow their own talent. If you’re struggling to find the skills you need in the marketplace, or can’t compete with the high salaries of your competitors, you can simply create the talent you need. Invest in training up an apprentice and you can mould them to fit exactly what your business needs.

Boosting your company image

Providing work and training opportunities for young people in particular can be a big plus for the image of your business. It shows you are investing in growth, thinking of the future and helping both the economy and your community.

Now, here are a few potential drawbacks to consider:

An investment in time

Taking on an apprentice will inevitably affect productivity, at least in the short term. Just like with recruitment, it’s time consuming to induct, train and mentor a new apprentice.

You’ll need to give them lots of support and guidance, both formally and informally. And you’ll have take lots of steps to make sure your business is set up to deliver good quality apprenticeships and traineeships. Plus, the paperwork – expect lots of it.

Lack of skill and experience

Without the proper guidance and supervision, especially at the start, an inexperienced apprentice could potentially affect your company’s reputation. They’re bound to lack skill and expertise, but this can be risky if your apprentice is ever involved in customer or client-facing work.

If your professional image is crucial to your business, you’ll need to take measures to manage this. There’s also the risk of major mistakes and perhaps even accidents. A slip-up with an order could be costly, while a run-in with a piece of equipment or machinery could be catastrophic.

This is another part of your responsibility as an employer – to manage and mitigate risk, for your business as well as the apprentice.

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About The Author

Katherine Kendrick

An experienced Payroll professional, I hold a CIPP Diploma in Payroll Management and have been working in the sector since 2003. In my spare time I like to be with my friends and family, or doing a spot of pilates.