SiteKiln gives you plain-English information, not legal or financial advice. Apprenticeship funding rules change regularly, always check the latest rates on gov.uk/apprenticeship-funding before making commitments.
# Apprenticeship Levy and Funding, How Small Firms Get the Government to Pay for Training
You don't need to be a giant contractor to use apprenticeship funding, as a small firm you can get the government to cover most of the training bill. You just need to know how the system works.
1. The apprenticeship levy, why you probably don't pay it
The apprenticeship levy is a payroll tax of 0.5% of your annual pay bill.
You only pay it if your UK payroll is over £3 million a year (including connected companies). That's roughly the top 2-3% of employers.
Most small construction firms don't pay the levy.
If you're under the £3m threshold, you still get government apprenticeship funding, just through the co-investment route instead of drawing from a levy pot.
Don't confuse this with the CITB levy · that's a separate, industry-specific training levy (see section 5).
2. The 95% co-investment deal for non-levy employers
If you don't pay the levy (which is most small builders), the deal in England is:
- Government pays 95% of the approved training and end-point assessment cost, up to the funding band maximum
- You pay 5% to the training provider · usually in monthly instalments over the apprenticeship
Worked example
| Funding band | Government pays (95%) | You pay (5%) |
|---|---|---|
| £8,000 | £7,600 | £400 |
| £12,000 | £11,400 | £600 |
| £18,000 | £17,100 | £900 |
| £27,000 | £25,650 | £1,350 |
Your 5% is paid to the training provider, typically monthly across the duration of the apprenticeship, not as a lump sum.
100% funding for small employers with young apprentices
If you employ fewer than 50 people and take on a 16-18 year old apprentice, the government can fund 100% of the training cost · your 5% is waived entirely.
This makes taking on a school leaver essentially free from a training cost perspective. You still pay their wages, PPE, and supervision time, but the training itself costs you nothing.
3. How much construction training actually costs
Each apprenticeship standard has a funding band · the maximum amount that can be funded through the apprenticeship system.
Funding bands range from £1,500 to £27,000. Construction trades sit mostly at the higher end.
Typical funding bands for construction apprenticeships
| Apprenticeship standard | Level | Typical funding band |
|---|---|---|
| Bricklayer | Level 2 | ~£12,000 |
| Carpentry and Joinery | Level 2 | ~£12,000 |
| Painter and Decorator | Level 2 | ~£9,000 |
| Plasterer | Level 2 | ~£9,000 |
| Plumbing and Domestic Heating | Level 3 | ~£15,000 |
| Electrical Installation | Level 3 | ~£18,000-£21,000 |
| Gas Engineering | Level 3 | ~£18,000 |
| Groundworker | Level 2 | ~£8,000 |
| Construction Site Supervisor | Level 4 | ~£9,000 |
| Construction Site Management | Level 6 | ~£20,000-£27,000 |
Bands are reviewed periodically. Always check the current list at gov.uk/government/publications/apprenticeship-funding.
Your actual cost at 5%
| Funding band | Your 5% share | Spread over (typical) |
|---|---|---|
| £9,000 | £450 | 24-36 months |
| £12,000 | £600 | 24-36 months |
| £18,000 | £900 | 36-48 months |
| £27,000 | £1,350 | 36-48 months |
At £600 over 3 years, that's about £17/month. For a fully trained bricklayer or carpenter at the end of it.
4. How to access the funding, step by step
Step 1: Create an Apprenticeship Service account
Go to apprenticeships.gov.uk/employers and create your employer account.
You'll need:
- Your Government Gateway details
- Your PAYE scheme reference
- Your organisation details (company number if applicable)
Do this before recruiting · it's free and you'll need it to access the funding.
Step 2: Choose the apprenticeship standard and level
Pick the right standard for the role, bricklayer, carpenter, groundworker, electrical, plumbing, etc.
All current standards and their funding bands are listed at gov.uk/government/publications/apprenticeship-funding.
Step 3: Find a training provider
Use the Find Apprenticeship Training service on gov.uk, or approach local colleges and specialist training providers directly.
Ask them:
- What standard and funding band they'd put your apprentice on
- What the total training cost is and your 5% share
- How often they attend college or have off-the-job training days
- What they expect from you (workspace, supervision, logbook support, off-the-job hours)
Step 4: Recruit your apprentice
Use your networks, local colleges, the Find an Apprenticeship website (gov.uk), or the National Apprenticeship Service (0800 015 0600).
Step 5: Add the apprentice to your account
Once you've agreed the training with a provider and recruited someone, add the apprentice details in your Apprenticeship Service account and approve the training plan.
Step 6: Government pays the provider
The government's 95% (or 100% for qualifying young apprentices) goes directly to the training provider through the Apprenticeship Service. You pay your 5% as agreed, monthly, tracked through the system.
Levy transfers from large employers
Big levy-paying employers (Tier 1 contractors, national firms) can transfer unused levy funds to smaller employers to cover 100% of training costs, up to the funding band maximum.
If you work regularly for a large contractor, ask them: "Do you transfer any of your apprenticeship levy to supply chain partners?" Some do, and it means your apprentice's training is fully funded by someone else.
5. CITB levy and grants, separate from the apprenticeship levy
Don't confuse these two. They are completely different levies with different purposes.
| Apprenticeship levy | CITB levy | |
|---|---|---|
| What it is | HMRC payroll tax at 0.5% above £3m payroll | Industry training levy on construction employers |
| Who pays | Large employers (payroll over £3m) | CITB-registered construction employers |
| What it funds | Apprenticeship training through the Apprenticeship Service | CITB grants and industry training programmes |
| Rates | 0.5% of total payroll above £3m | ~0.35% on PAYE wages, ~1.25% on net CIS payments |
| Small employer exemption | Under £3m payroll = don't pay, use co-investment instead | Under ~£120,000 total labour bill = exempt from levy |
CITB grants for apprentices
If you're a CITB-registered employer (most construction firms over the exemption threshold are), you can claim grants towards apprentice costs · on top of the government's 95% funding.
Typical CITB apprentice grants:
- Annual grants paid per apprentice per year of training
- Completion grants paid when the apprentice finishes their qualification
- Often amounting to several thousand pounds over the full apprenticeship
These grants can more than cover your 5% co-investment and contribute towards wages, PPE, and supervision costs.
Check the current rates: go to citb.co.uk and search "grants and funding" for the latest apprentice grant schedule.
The maths in your favour
For a typical Level 2 bricklayer apprenticeship (£12,000 band):
| Income/cost | Amount |
|---|---|
| Government funding (95%) | £11,400 (paid to provider) |
| Your 5% co-investment | -£600 (over 3 years) |
| CITB grants (typical) | +£2,500-£4,000 (over 3 years) |
| £1,000 incentive (if 16-18) | +£1,000 |
| Net position | You're in profit on the training alone |
The training is effectively free or better than free once CITB grants are factored in. You're paying the apprentice's wages and supervision time, but the training is covered.
6. The £1,000 incentive payment
On top of government funding and CITB grants, there's an additional £1,000 incentive for certain apprentices in England.
You get £1,000 if your apprentice is:
- Aged 16-18, or
- Aged 19-24 with an Education, Health and Care Plan (EHCP) or has been in care / is a care leaver
The £1,000 is paid in two instalments via your training provider:
- £500 after 3 months
- £500 after 12 months
It's meant to help with the extra cost of supporting younger apprentices, more supervision time, smaller tools, PPE sizing, patience.
7. Practical steps to take on your first apprentice
1. Decide on the trade and level
Pick the trade that fits your work pipeline, bricklaying, carpentry, groundworks, plastering, electrical, plumbing, painting, roofing, etc.
Level 2 is the standard entry point for most trades. Level 3 is for more advanced or technical roles (electrical, plumbing, gas).
2. Check your position on levies
- Payroll under £3m → non-levy employer, use 95% co-investment
- Check whether you're CITB-registered and what grants you can claim
- If you employ under 50 people and recruit a 16-18 year old → 100% funded
3. Create your Apprenticeship Service account
Do this first, it's free, takes 15 minutes, and you'll need it to access funding.
4. Talk to training providers
Ask the questions from Step 3 above. Compare at least two providers, quality and support vary significantly.
5. Plan the real cost
| Cost | Typical |
|---|---|
| Training (your 5%) | £400-£1,350 over 3 years |
| Apprentice wages (NMW or above) | £8.00/hr minimum (year 1 / under 19) |
| PPE, basic tools | £200-£500 upfront |
| Supervision time | Real but hard to quantify, plan for it |
Offset with:
- Government 95%/100% training funding
- CITB grants (potentially £2,500-£4,000+)
- £1,000 incentive for younger apprentices
- A trained, loyal tradesperson at the end of it
6. Recruit and set expectations
Be honest with candidates: early starts, site work, travel, physical graft, and the fact they're learning and working. The good ones thrive on that honesty.
7. Keep on top of the paperwork
- Make time for regular reviews (you, apprentice, provider · usually every 8-12 weeks)
- Track off-the-job training hours · currently minimum 6 hours per week for a full-time apprentice
- If they keep missing college, flag it early · attendance problems cause funding problems
What to do next
- Check whether you pay the apprenticeship levy · if your payroll is under £3m, you don't. Use co-investment.
- Create an Apprenticeship Service account at apprenticeships.gov.uk/employers · free, 15 minutes
- Check CITB grant rates at citb.co.uk · these can make the maths very attractive
- Talk to 2-3 training providers about the standard, cost, and your 5% share
- If you employ under 50 people and take on a 16-18 year old · training is 100% funded. No 5% from you.
Sources
- Apprenticeships, Skills, Children and Learning Act 2009 · legislation.gov.uk/ukpga/2009/22
- Finance Act 2016, Part 6 (apprenticeship levy) · legislation.gov.uk/ukpga/2016/24/part/6
- ESFA, Apprenticeship Funding Rules 2025/26 · gov.uk/guidance/apprenticeship-funding-rules
- ESFA, Apprenticeship Funding Bands · gov.uk/government/publications/apprenticeship-funding
- Industrial Training Act 1982 (CITB levy) · legislation.gov.uk/ukpga/1982/10
- CITB, Grants Scheme · citb.co.uk
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