By Ahmed Nawaz, Payroll Semi-Senior

Apprenticeships are a fantastic way to develop new talent within your business, but they also come with a few extra payroll considerations.

Unlike regular employees, apprentices are still in training, combining practical work experience with structured learning.

Because of this, they start on a lower minimum wage.

However, after their first year of apprenticeship (if they are aged 19 or over), they must receive the NMW or NLW for their age group.

The legal minimum wage rates per hour are: *

• National Living Wage (21 and over): £11.44
• National Minimum Wage (18-20): £8.60
• Under 18s: £6.40
• Apprentices: £6.40 (if in the first year or under 19)

You must ensure you are paying apprentices correctly to avoid legal penalties and disputes.

*Correct as of February 2025

Can apprentices be paid more?

In short, yes.

The minimum wage is just that – a minimum.

You can choose to pay your apprentices more, and a competitive wage can make your apprenticeship programme more appealing and help you build a skilled, loyal workforce.

Payroll considerations for apprentices

You need to be aware of a few key payroll requirements when hiring apprentices:

• Pay progression: Apprentices who turn 19 and have completed their first year must be paid the NMW or NLW for their age, not the lower apprentice rate.
• Apprenticeship agreement: A formal agreement must be in place, outlining the apprentice’s training and employment conditions.
• Training time: Apprentices must spend at least 20 per cent of their working hours on formal training, which must be paid.
• The Apprenticeship Levy: Large employers with an annual payroll over £3 million must pay this levy to fund apprenticeship training.

Whilst there are similar hoops to jump through when it comes to paying any other employee, apprentices have their own unique requirements.

The Government also provides financial incentives to businesses hiring apprentices, including:

• A £1,000 payment for each eligible apprentice hired.
• Funding for training costs: Non-levy-paying employers only need to contribute 5 per cent of training costs, with the Government covering the remaining 95 per cent (up to the funding band limit).

If your business pays the Apprenticeship Levy, you can access these funds to cover training and assessment costs, plus an additional 10 per cent Government contribution.

Why your accountant should be involved

Navigating apprentice payroll can be complex, especially when factoring in wage changes, training costs, and compliance requirements.

Engaging your accountant early on can help you avoid costly mistakes and ensure your payroll processes are up to date.

We offer the full spectrum of payroll services to our clients and would be happy to discuss this with you.

If you are thinking of employing apprentices for the first time or need guidance on managing payroll or apprenticeship funding, we can help.

Please get in touch with our payroll team for more information.