Small businesses can earn a £3,000 cash boost by hiring an apprentice

Time is running out for small businesses to apply for a £3,000 cash boost for hiring an apprentice.

Businesses already receive £1,000 for hiring an apprentice. The extra incentive gives employers an opportunity to earn a total £4,000 if they hire an apprentice between April and September.

The government announced the extra funding as part of the Budget in March, with the aim of helping ‘employers invest in the skilled workforce they need for the future’.

Update – the government has extended the apprenticeship cash incentive until 31 January 2022.

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How do you apply for the apprenticeship incentive scheme?

If you’ve hired an apprentice between 1 April and 30 September 2021, you can apply for a £3,000 new apprentice payment from the government.

The government counts an apprentice as someone aged 16 to 18, or someone aged 19 to 24 who has been in care of their local authority or has an education, health and care plan.

To receive the full £3,000 payment, the apprenticeship will need to last for at least 12 months. You’ll need to set up an apprenticeship service account to apply for the funding.

When does the scheme end?

Applications close on 30 November 2021. To be eligible for the incentive, your apprentice must have started working for you between 1 April and 30 September, while their apprenticeship must officially start before 30 November 2021.

For example, if someone started working for you in August and then started an apprenticeship in October, you’ll still be able to apply for the funding.

If your apprentice joined before 1 April 2021, you won’t be able to receive the extra £3,000. However, you could still benefit from the £1,000 all businesses receive when they hire an apprentice, if you haven’t already.

What can you spend the money on?

There are no rules on how employers spend the money. However, the government suggests that it’s used to cover apprentice costs such as travel expenses, equipment, or uniform.

When do you get paid?

The government says it could take up to 80 days to verify the details of the apprenticeship – they may also contact your business for more details.

For each apprentice you hire within the dates of the scheme, you’ll receive £1,500 after they’ve completed 90 days of their apprenticeship, and another £1,500 after they’ve completed a full year.

Payments are made on the 14th working day of the month and you can check when you’re due to be paid on your apprenticeship service account.

Helping employers and the workforce to recover from the pandemic

The £3,000 cash incentive is part of the government’s ‘Plan for Jobs’, which was launched last year. It aims to create more jobs and bring the education system closer to employers.

The Chancellor, Rishi Sunak, said the apprenticeship cash boost would improve opportunities to stay in and find work for young people who have been ‘hit especially hard’ by the Covid-19 pandemic.

Official Universal Credit figures show that 450,000 16 to 24-year-olds were listed as ‘searching for work’ in August – nearly double the figure in March 2020.

Minister for Apprenticeships and Skills Gillian Keegan added that the cash boost will encourage businesses to invest in their future workforce, giving them the ‘skilled talent pipeline they need to thrive’.

What are the benefits of employing an apprentice?

Alongside the financial advantages explained above, there are many reasons why hiring an apprentice could be a positive step for your small business.

Here’s an overview of some of the key benefits:

• you can teach people on the job – helping apprentices to to develop skills unique to your small business
• apprentices are often highly motivated with an appetite to learn and one eye on gaining long-term employment
• you can give back to young people and the local community – this increases your chances of having a loyal and dedicated workforce

Read our in-depth guide to hiring an apprentice to find out more about your legal requirements, the costs involved, and the employment frameworks you can use.

Do you have a positive experience of hiring apprentices? Let us know in the comments below.