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National Minimum Wage & Apprenticeship Levy changes

Date published: Date modified: 2022-10-25

Apprenticeships undoubtedly provide employers with an invaluable opportunity to grow and strengthen their workforce with fresh insight and enthusiasm from the next generation of workers.

Employing apprentices is a commitment and one that requires employers to stay up to speed with the latest legislative updates and developments wherever possible.

Keep reading for details of changes that have recently been implemented in two key areas – the National Minimum Wage and the Apprenticeship Levy.

Latest National Minimum Wage increase comes into force

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to earn by law.

From the start of October 2016, the NMW for all apprentices and workers under the age of 25 increased, meaning that all employers must update their payrolls in line with these new rates of pay.

The new rates, which apply to workers who are under the age of 19, as well as apprentices who are over the age of 19, but are in the first year of their apprenticeship, are as follows:

  • £7.20 per hour – 25 years old and over
  • £6.95 per hour – 21 to 24 years old
  • £5.55 per hour - 18 to 20 years old
  • £4 per hour – 16 to 17 years old
  • £3.40 - for apprentices who are under the age of 19, or are 19 or over and in year one of their apprenticeship

New Apprenticeship Levy guidelines are rolled out

In addition to the new NMW rates being released, the Apprentice Levy guidance has also been updated. From May 2017, employers who pay the levy will receive a new digital service that allows them to spend their available funds on training for their apprentices.

Employers who do not pay the levy will receive a contribution from the government of up to 90% towards training costs, while smaller employers will receive this service for free. Any employer that hires anyone between 16 and 18 years old will also receive extra funding.

Will you have to pay the Levy?

Employers who have an annual pay bill of more than £3 million will need to spend 0.5% of the total on the apprenticeship levy.

However, a new ‘levy allowance’ of £15,000 will be introduced, and this figure will be deducted from the 0.5%.

This will then be paid to HMRC through Pay As You Earn (PAYE) along with the income tax and National Insurance.

If you’re looking for further information about apprenticeship funding, the DfE has provided detailed guidance notes.
By Andi Brown
SAAF Education 340 110

10 January 2017



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