Payroll and Apprentices

With the increase in apprentices, we are often asked about how apprentice schemes work and, of course, about any payroll implications they might have. So here’s our quick guide to the key things you need to know if you are considering employing an apprentice.

  1. An apprentice must be aged 16 or over and they must be paid at least the minimum wage for their age. They must also work for at least 16 hours per week, with the normal figure being 30 hours per week.
  2.  An apprentice must work with experienced staff, learn job specific skills and study for a work based qualification during the working week.
  3. An apprentice must be paid for time spent training or studying.
  4. An apprentice must receive the same conditions of employment as other employees, including: paid holiday, sick pay and any benefits including childcare voucher schemes.

What About Apprenticeship Grants?

If you employ an apprentice you may be eligible for an apprenticeship grant of £1,500 if you have less than 50 employees and your apprentice is aged between 16 and 24. If you are providing the training you can apply for training funding to cover some or all of the training costs.

Do Employers Have to Pay National Insurance Contributions?

Employers who have an apprentice will not need to pay employers’ National Insurance Contributions (NICs) on the apprentice’s earnings if the apprentice is under 25, earning below £43,000 and on an approved UK government apprenticeship. The evidence required is either a written agreement between the employer, the apprentice and a training provider or evidence that the apprenticeship receives government funding.  The written agreement must show the government apprentice framework or standard and a start and expected end date for the apprenticeship scheme.

Alternatively you can provide evidence of receipt of government funding for the apprenticeship.

Evidence of the apprenticeship must be supplied to your payroll provider in order to receive the benefit of paying no National Insurance Contributions and the apprenticeship minimum wage.

What is the Apprenticeship Levy?

The Apprenticeship Levy came into effect from April 2017 for larger employers in England who have a wage bill of over £3m per year. The levy is 0.5% of the annual wage bill, with a £15,000 annual ‘levy free’ allowance – which is where the figure of £3m comes from.

Whilst smaller employers will not have to pay this levy they will have to pay 10% towards the cost of apprenticeship training, for those aged 19 and over. The other 90% will be paid by the Government. 100% of the cost of the training will be funded by the Government, up to the maximum funding bands, for apprentices aged 16-18.

Contact Us for Help and Advice

If you are thinking of taking on an apprentice and need some help and advice from an outsourced payroll provider, contact us or call us on 0121 422 0550. We’ll be happy to help.

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