Taking on an apprentice: what it actually costs in 2026

Apprenticeships have a reputation among small employers as a good idea buried under paperwork. That reputation was earned, but 2026 has changed the numbers enough to be worth a second look — particularly for trades, workshops and any business where the skill you need is not sitting in a CV pile.

The short version: for a small employer taking on someone under 25, the training is now fully funded, there is no employer National Insurance to pay, and from October there is a £2,000 payment on top. What is left is the wage and your own time. Here is the whole calculation, and the obligations that come with it.

What the training costs you

Employers too small to pay the apprenticeship levy — broadly those with a pay bill under £3 million — access funding through the government's co-investment arrangement rather than a levy account.

From 1 August 2026, apprentices aged under 25 at small and medium employers are 100% government funded. There is no employer contribution towards the training at all. For apprentices aged 25 and over, the employer pays 5% co-investment and the government pays the other 95% — so an apprenticeship with an £18,000 funding band costs the employer £900.

From October 2026 there is also a £2,000 incentive payment available to small and medium employers for each new apprentice recruited aged 16 to 24, on top of the fully funded training.

What the wage costs you

The apprentice rate of the National Minimum Wage is £8.00 an hour from 1 April 2026. It applies to apprentices aged under 19, and to apprentices aged 19 or over during the first year of their apprenticeship. After that first year, an apprentice aged 19 or over must be paid the full rate for their age — £10.85 for 18 to 20 year olds and £12.71 for those aged 21 and over.

That step-up is the number employers most often fail to diary. An apprentice who turns 21 partway through, or who passes their first anniversary, gets a legally mandated pay rise, and paying the apprentice rate beyond the point it applies is a minimum wage breach with arrears and penalties attached.

There is also a genuine National Insurance saving. Employers pay no Class 1 secondary National Insurance on the earnings of an apprentice under 25 up to the upper secondary threshold of £50,270, using National Insurance category H. On a wage that would otherwise attract 15% above the £5,000 secondary threshold, that is a real reduction rather than an accounting one.

A worked example

Illustrative figures, for a small employer taking on an 18-year-old apprentice at 30 hours a week from October 2026.

Wages at £8.00 an hour over 30 hours is £240 a week, or £12,480 a year. Employer National Insurance would ordinarily be 15% of the £7,480 above the secondary threshold — £1,122 — and is nil, because the apprentice is under 25. Training is fully funded, so nothing there. Pension contributions apply on the same terms as any other employee, at 3% of qualifying earnings, which on £12,480 is about £187 a year. The £2,000 incentive comes back the other way.

First-year cost, before the incentive: around £12,667. After it: around £10,667, or roughly £205 a week for someone working thirty hours.

The cash cost of an apprentice is now the wage and very little else. The real cost is supervision, and it is the one nobody budgets for.

Budget for the second year properly, though. If that apprentice is 19 by then and past their first year, the rate jumps to £10.85 — £16,926 a year at the same hours, a 36% increase in the wage bill for the same person doing the same job better.

What you are actually signing up to

An apprentice is an employee with full employment rights. That means a written statement of terms on or before day one, holiday entitlement, sick pay, auto-enrolment assessment, employers' liability insurance and every other duty that comes with any hire. There is also an apprenticeship agreement — a specific document setting out the skill being trained, the training and the terms — plus a commitment statement signed by employer, apprentice and training provider.

The training itself has rules attached to the funding. The minimum duration for an apprenticeship was reduced from twelve months to eight months from August 2025. Off-the-job training is no longer a flat 20% of working hours; each apprenticeship standard now publishes its own minimum hours requirement, which can only be reduced where there is evidence of relevant prior learning, and never below 187 hours or eight months. Funding can be recovered if the minimum off-the-job training is not delivered, so the hours the apprentice spends learning rather than working are a contractual reality, not a nice-to-have.

That is the part small employers underestimate. An apprentice on 30 hours a week is not 30 hours of productive labour, and treating the training time as an interruption is the most common reason an apprenticeship fails on the employer's side.

Choosing a training provider

The provider matters more than the paperwork. Ask how many apprentices they have taken through the specific standard you need, how often an assessor will actually visit, who you call when something goes wrong, and what their completion rate looks like. A provider who wants to enrol quickly and communicate rarely will cost you the apprentice.

Ask about end-point assessment too — the independent assessment at the end that determines whether the apprentice passes — and what preparation the provider builds in for it. This is where under-supported apprentices come unstuck after two years of good work.

Is it worth it?

For a business that needs a specific skill and cannot buy it in, usually yes, because you are training someone in your methods from the start rather than untraining them from someone else's. For a business that wants cheap labour, no — the supervision burden makes an apprentice more expensive than the wage suggests, and it shows up as a first-year cost against a third-year benefit.

The decision is really the same one as any hire, made on a longer horizon: what does this person need to produce for the arrangement to make sense, and how long before they get there. The real cost of a bad hire applies with equal force here, and probation periods and what they actually protect is worth reading before the agreement is signed, because an apprenticeship agreement is not as easy to walk away from as an ordinary contract.

Common questions

How much does an apprentice cost a small employer in 2026?

Mainly the wage. From 1 August 2026, apprenticeship training is 100% government funded for apprentices aged under 25 at small and medium employers, with no employer contribution; for apprentices aged 25 and over the employer pays 5% co-investment. Employers pay no secondary National Insurance on apprentices under 25 earning up to £50,270. From October 2026 a £2,000 incentive is available for each new apprentice aged 16 to 24. An 18-year-old on 30 hours a week at the £8.00 apprentice rate costs roughly £12,500 a year in wages and pension, or about £10,700 after the incentive.

What is the apprentice minimum wage from April 2026?

£8.00 an hour. The apprentice rate applies to apprentices aged under 19, and to apprentices aged 19 or over who are in the first year of their apprenticeship. Once an apprentice aged 19 or over completes that first year, they must be paid the full National Minimum Wage rate for their age — £10.85 for 18 to 20 year olds and £12.71 for those aged 21 and over from April 2026. This transition is the most common minimum wage breach involving apprentices, so diary both the apprentice's birthday and their first anniversary, and adjust the pay rate on the correct date.

Do apprentices have the same employment rights as other staff?

Yes. An apprentice is an employee, entitled to a written statement of terms on or before their first day, paid holiday, statutory sick pay, auto-enrolment into a workplace pension where they meet the criteria, and protection from unfair treatment. You also need employers' liability insurance from the day they start. In addition to the ordinary employment contract there is an apprenticeship agreement setting out the skill being trained and the training arrangements, plus a commitment statement signed by the employer, the apprentice and the training provider. Ending an apprenticeship early is harder than ending an ordinary contract, so choose carefully.

How much time does an apprentice spend training rather than working?

It depends on the standard. The former flat requirement of 20% of working hours has been replaced by a minimum number of off-the-job training hours published for each individual apprenticeship standard. That minimum can only be reduced where there is documented evidence of relevant prior learning, and no programme can fall below 187 hours of training or eight months in duration, the minimum duration having been reduced from twelve months in August 2025. Funding can be clawed back if the required off-the-job hours are not delivered, so the training time needs to be planned into the rota rather than squeezed around it.