Apprenticeships are funded by the apprenticeship levy this is collected by HMRC from large employers who have an annual PAYE liability of £3M or more. The levy is charged at a rate of 0.5% of an employer’s paybill. This is applicable to all employers in all sectors. However, we are a nation of SME's so less than 2% of UK employers will pay it. If you are a non-levy payer, the government will fund 95% of your apprenticeship programme.
It is also possible to ask a large levy payer to transfer some of their unused funds, this route means that 100% of the cost of training will be covered. Normally large levy payers are keen to distribute their surplus levy funds in their local area or within their supply chain. It’s important to note that levy funds or government contributions can only be used to fund training costs and cannot be used to fund wages of apprenticeships.