Do employers pay National Insurance on an apprentice?

Not on an apprentice under 25 who meets the conditions. HMRC's rates and thresholds for employers 2026 to 2027 put category letter H, apprentice under 25, at 0% employer National Insurance on all earnings up to the apprentice upper secondary threshold of £50,270 a year, with 15% charged only on the balance above that. On a standard category A employee, 15% is charged on everything above the £5,000 secondary threshold. Across a five-year apprenticeship paid at statutory minimum rates, that difference is £10,995 of employer National Insurance never charged. The apprentice still pays their own National Insurance in the normal way above the £12,570 primary threshold.

What is the apprentice minimum wage in 2026?

£8.00 an hour from 1 April 2026, up from £7.55 the year before. GOV.UK's rates apply that figure to apprentices aged under 19, and to apprentices aged 19 and over who are in the first year of their apprenticeship. Once an apprentice is 19 and has finished the first year, they move to the rate for their age: £10.85 for 18 to 20 year olds and £12.71 for 21 and over. That step-up is the largest single cost event in an apprenticeship and it is entirely predictable, so it belongs in a budget rather than arriving as a surprise in a payroll run.

Who pays for apprenticeship training if I am a small employer?

The government, in full, for apprentices aged 16 to 24 if you do not pay the apprenticeship levy. GOV.UK's employer funding guidance states the government pays 100% of the cost up to the funding band maximum for that age group, and 95% for apprentices aged 25 and over with the employer contributing the remaining 5%. The levy applies to employers with an annual pay bill above £3 million, so most small firms are outside it. The funding band maximum is set per apprenticeship standard, and any training cost above the band is the employer's to pay.

Is there a cash payment for taking on an apprentice?

Yes, from 1 October 2026. GOV.UK's employer funding page states that employers may be eligible for a hiring payment of up to £2,000 when recruiting new apprentices aged 16 to 24, subject to the criteria in the apprenticeship funding rules. Separately, £1,000 is available towards workplace costs such as equipment, travel and uniform for apprentices aged 16 to 18, and for those aged 19 to 24 with an education, health and care plan or previous care experience. That £1,000 is paid in two £500 instalments, at 90 days and at one year after the apprenticeship starts.

Do I have to auto-enrol an apprentice into a pension?

Not until they turn 22. Automatic enrolment applies to workers aged between 22 and State Pension age who earn at least £10,000 a year, so a 17 year old starting an apprenticeship is outside it. They can ask to join, and once they are earning above the lower threshold the employer has to contribute if they opt in. For a five-year apprenticeship started at 17, the auto-enrolment duty first bites in the year they turn 22, which is usually after the apprenticeship has finished. It still needs to be on the payroll calendar, because the assessment runs every pay period and the duty starts automatically on the birthday.

An apprentice costs £98,300 over five years. The employer's National Insurance on it is nil.

Reacting to: ‘We’d love an apprentice – but the government has made it too expensive’ (City A.M., 26 August 2026) →

Jane Somerville runs Bowers & Jones, a precision equipment manufacturer in Bilston, and she told City A.M. this morning that the variable cost of running her factory has gone from £36 an hour to nearly £56 an hour since she took the business over in 2020. On apprentices she was blunt: the investment across four or five years is "close to, if not over £100,000", and that makes taking someone on a barrier.

I checked her number before writing a word of this, and she is right. At statutory minimum rates a five-year apprenticeship costs £98,300 in wages. That is the finding, and I am not going to argue with an owner who has done the sum on her own payroll. What I do want to separate out is which part of that £98,300 the government put there — because on an apprentice specifically, the answer is close to nothing, and there are two funding changes live this quarter that the coverage has not caught up with.

Where the £100,000 comes from

An illustration, from published rates rather than a client file: one apprentice starting at 17 on a five-year engineering programme, 37.5 paid hours a week across 52 weeks, paid exactly the statutory minimum throughout. GOV.UK's National Minimum Wage rates from 1 April 2026 set the apprentice rate at £8.00 an hour, the 18 to 20 rate at £10.85, and the 21-and-over National Living Wage at £12.71. The apprentice rate applies while the apprentice is under 19, or is 19 and over but still in the first year. After that they move to their age rate.

	Hourly rate	Wages	Employer NI charged	Employer NI if category A
Year 1, age 17	£8.00	£15,600	£0	£1,590
Year 2, age 18	£8.00	£15,600	£0	£1,590
Year 3, age 19	£10.85	£21,158	£0	£2,424
Year 4, age 20	£10.85	£21,158	£0	£2,424
Year 5, age 21	£12.71	£24,784	£0	£2,968
Five-year total		£98,300	£0	£10,995

Two things fall out of that table. The first is that the £100,000 is almost entirely wages, and the step from £8.00 to £10.85 in year three is the single largest cost event in the programme — a £5,558 jump in one go, on a fixed and knowable date. The second is the last two columns.

The National Insurance rise does not touch an apprentice

This is the part I think gets lost. The employer National Insurance increase is the central grievance in the piece — City A.M. cites the British Chambers of Commerce calculator putting small firm costs up 70% over the past decade, with a quarter of the increases since the 2024 Budget down to government policy, and the NI change alone raising £25bn. All of that is about the payroll in general. None of it lands on an apprentice under 25.

HMRC's rates and thresholds for employers 2026 to 2027 put category letter H, apprentice under 25, at 0% employer National Insurance on every pound up to the apprentice upper secondary threshold of £50,270 a year. Only the balance above that is charged at 15%. A standard category A employee is charged 15% on everything above the £5,000 secondary threshold. Run the same five years through category A and the employer NI bill is £10,995. Run it through category H and it is nil. That relief is not new and it did not shrink when the rate went from 13.8% to 15% — it got more valuable, because it is a zero rate on a bigger number.

Two funding changes that landed this quarter

Training is now free, not 95% free. GOV.UK's apprenticeship funding guidance for employers states that if you do not pay the apprenticeship levy, the government pays 100% of training and assessment costs up to the funding band maximum for apprentices aged 16 to 24. The old 5% co-investment for that age group is gone. For apprentices aged 25 and over the split stays at 95% government, 5% employer. The levy only applies to employers with a pay bill above £3 million, so a firm the size of Bowers & Jones sits on the 100% side of that line.

There is £3,000 of cash on the table for a 16 to 18 year old. From 1 October 2026, the same guidance says employers may be eligible for a hiring payment of up to £2,000 for recruiting a new apprentice aged 16 to 24, on the criteria set out in the funding rules. Separately, £1,000 is available towards workplace costs — equipment, travel, uniform — for apprentices aged 16 to 18, paid as two £500 instalments at 90 days and at one year. Both together take the year-one cost of the apprentice in the table above from £15,600 down to £12,600.

What it is actually cheaper than

The comparison that matters is not apprentice against nobody. It is apprentice against the adult you would otherwise hire to do some of that work. Five years of one 21-and-over employee at the National Living Wage, on the same 1,950 hours, is £123,922 in wages plus £14,838 of employer National Insurance at category A — £138,760. The apprentice is £98,300 with nil NI. That is a £40,460 gap over five years, before the £3,000 of payments and before any training cost, which the employer is not paying either.

The genuine cost problem in that City A.M. piece is real, and it is the £36 to £56 an hour on the whole factory — adult wages, energy, materials. Naming the apprentice as the thing you cannot afford is the one line in the budget where the government has already taken the cost off you.

Which of these is you

Pay bill under £3 million, apprentice aged 16 to 24. Training funded at 100% to the band maximum, employer NI nil, and from 1 October a hiring payment of up to £2,000. This is the best version and it is the one most small employers are in.

Apprentice aged 25 or over. You pay 5% of training, and employer NI applies normally at 15% above £5,000, because category H stops at 25. An apprentice's 25th birthday moves them onto category A mid-programme, and payroll has to action that.

Pay bill above £3 million. You are a levy payer, funding comes from your levy account, and the co-investment rate where your funds run short is a separate question from the SME rate above. Worth a conversation rather than an assumption.

Employment Allowance. It is £10,500 for 2026-27. If your total employer NI liability is below that, you were not paying employer NI on anyone anyway, and the category H saving is worth nothing extra to you. Check which side of £10,500 your payroll sits on before you count the £10,995 as a saving — our true cost of a hire calculator will do the whole employer-cost sum for you.

Three things to do this week

1. Check the NI category on any apprentice already on your payroll. To use category H you need the apprentice under 25 on a government-recognised apprenticeship and a written agreement naming the framework or standard with a start and expected completion date, signed by employer, apprentice and training provider — or, in England and Wales, evidence the apprenticeship is government funded. Keep that document; it is the evidence HMRC expects. If an apprentice has been sitting on category A, you have been paying National Insurance you did not owe.

2. Time the start date against 1 October. The £2,000 hiring payment applies to new apprentices recruited from that date, subject to the criteria in the 2026 to 2027 apprenticeship funding rules. If you are already planning an autumn start, read those criteria before you fix the date.

3. Put the year-three step-up in the forecast now. The move from £8.00 to £10.85 is £5,558 on a known date. That belongs in a cashflow forecast the day the apprentice starts, not in the month it happens.

What is still open

Two things are not settled. The detailed eligibility criteria for the £2,000 hiring payment sit in the funding rules and take effect on 1 October 2026, so anyone recruiting in September is planning against rules that are published but not yet in force. And the National Minimum Wage rates for April 2027 are not set: the Low Pay Commission recommends them and they are normally confirmed at the autumn Budget, which for Chancellor John Healey is his first. Until that lands, the year-three step in the table above is the right number to budget on and the April 2027 uplift is not knowable. We will update this page when it is.

Getting the category letters, the funding claims and the age-change triggers right is ordinary payroll and pensions work, and it is the sort of thing that quietly costs an employer thousands when it is left to a birthday nobody diarised. If you want a second pair of eyes on what your people actually cost you, that is what our small business accounting work is for.