For an apprentice who starts aged 16 to 24, no employer contributes to the training price, and at a salary around £20,000 the employer NI you stop paying covers most of their learning time.
What a Young Apprentice Costs an Employer in 2026
By James Cotton · Last updated · 5 min read
Part of our topic guides on Government-Funded Data & AI Training and AI Skills for Business.
By James Cotton, Founder, iO-Sphere
No employer contribution to the training price
For a young apprentice, the invoice you would expect does not arrive. The Department for Education's apprenticeship funding rules for 2026-27, version 3 of 29 July 2026, cover starts on or after 1 August 2026. Where the apprentice is aged 16 to 24 at the start, "the government will fund all of the apprenticeship training and assessment costs, up to the funding band maximum" (paragraph 214).
Non-levy employers are covered, and so are levy payers whose funds have run out. Paragraph 215 then rules out a top-up: "the provider must not request any employer contribution". Anything charged above the funding band would be yours, so ask. A levy payer with money still in its account pays for a young apprentice from that account, as before, and comes under the government's funding only once those funds are insufficient.
The change was announced by the government on 11 May 2026 and confirmed by DWP and DfE on 28 July for starts from August. Hire someone aged 25 or over and the employer shares the training price again; our guide to the 2026 levy reforms sets out how much by levy status, alongside the other 2026-27 rates and dates.
Employer National Insurance stops below £50,270
On an ordinary employee, employer NI is 15% of pay above the secondary threshold of £5,000 a year, or £96 a week. HMRC's rates and thresholds for 2026-27 show both figures unchanged since 6 April 2025. It is an easy line to forget.
An apprentice under 25 goes on category H. The employer rate is then 0% on their pay up to the apprentice upper secondary threshold of £50,270 a year, or £967 a week. Above that ceiling, the usual 15% applies.
The saving is quick to work out. Take the salary, subtract £5,000, and multiply by 15%. What comes out is the whole of the employer NI you would otherwise have paid below the ceiling, year by year, for as long as the apprenticeship runs and the person is under 25.
The smallest firms should check one thing first. The Employment Allowance takes £10,500 off an eligible employer's NI bill in 2026-27, so a firm whose whole employer NI bill is under £10,500 already pays none. For that firm, category H saves little in cash.
The learning time is the real cost
Time is what you give up. Skills England sets a minimum of 370 hours of off-the-job training for ST0118, the standard behind Advanced Data & AI. At a 37.5-hour week, that is about ten working weeks of paid time given over to learning, spread across the programme.
The NI line pays for most of it. Over a 15-month training period, the length set out in our guide to the apprenticeship routes, the NI you stop paying at a salary around £20,000 covers most of the paid time those 370 hours represent. The rest of each week goes on your work. How an analyst's first year runs, month by month, is in our employer guide to a data analyst apprentice.
A £2,000 payment for smaller employers
Smaller firms get a line in credit. Under paragraphs 133 to 137 of the same rules, a non-levy employer that takes on an apprentice aged 16 to 24 qualifies for £2,000 where the practical period starts on 1 October 2026 or later. The apprentice must not have been employed by you for more than 90 days before the start, though people who began the job on 1 or 2 July 2026 still qualify if training starts by 1 October 2026.
The money comes through the provider, half at 90 days and half at 365 days. The government reserves the right to withdraw the payment in-year, with at least three months' notice, so plan the hire on the other three lines and count this as welcome, not as budget. Our page on apprenticeships for smaller employers covers how it reaches you.
The sum at an illustrative £20,000
This is an illustration. The salary is a round £20,000, chosen to make the arithmetic easy, and it says nothing about what apprentices earn. The period is the 15 months of training.
- Training price: £0 from the employer, up to the funding band.
- Employer NI saved: £20,000 minus £5,000, times 15%, which is £2,250 a year, or about £2,800 over 15 months.
- Learning time: 370 hours, about ten working weeks, which at that salary is a little under £3,800 of paid time.
- Hiring payment: £2,000, for an eligible non-levy employer.
Net of the NI saving, the learning time comes to just under £1,000 across the training. For an eligible smaller employer, the £2,000 payment more than covers that, provided it is still running when it falls due.
When the sum does not work
Three cases break it. The first is a role with no real data work. The training is built on the work the apprentice does, whether they already hold the job or are hired into it, and without that work the 370 hours have nothing to sit on and the other lines stop mattering.
The second is a firm already inside the Employment Allowance, where the NI line is worth little in cash and most of the learning time is yours to carry. The third is a practical period that begins before 1 October 2026: the training is still funded for an under-25, but the hiring payment does not apply. Salary changes the answer too, since the NI saving and the value of the 370 hours each move with pay. Rerun the sum on your own figure before you commit to a hire into Advanced Data & AI.
Frequently asked questions
What must we pay an apprentice?
Pay what the role is worth in your market, set the way you would for any new starter doing that work. The law sets a floor, the apprentice minimum wage: £8.00 an hour from 1 April 2026, for apprentices under 19 or aged 19 and over in their first year, after which the minimum for their age applies. It is a legal floor rather than a going rate, and a poor guide to what attracts a capable person.
Does the NI relief continue after the apprenticeship?
No. Category H applies only while the person is an apprentice under 25, so once the apprenticeship ends you pay employer NI on them as you would for any other employee. That is why the worked total counts the saving over the training period and no further.
What happens if the apprentice turns 25 mid-programme?
The funding rules test age at the start, so an apprentice who was 24 when they started stays funded as an under-25 for the whole programme. The NI relief works differently: it applies only while they are under 25, so from that point you pay employer NI on their pay in the usual way.
Build a data-literate workforce
Data apprenticeships funded through the Growth & Skills Levy: £0 for any apprentice under 25, and most of the cost covered for older starts.