Apprenticeship ROI Calculator 2025/26
Calculate the net cost and productivity value of taking on an apprentice in 2025/26. Model levy funding, co-investment, NLW salary, employer NI and the ramp-up in productivity to find the true return on investment of hiring an apprentice.
Key Inputs
- Apprenticeship standard and level (Level 2-7) — determines funding band
- Duration of apprenticeship (months)
- Apprentice salary (£/year) — must meet the Apprentice NMW of £7.55/hr
- Whether you are a levy-paying employer (payroll over £3 million)
- Estimated productivity ramp-up: % of full productivity in months 1-6, 7-12, 13+
- Line manager time cost: hours/week coaching and supervising (£/hr)
What You'll Get
- Total training cost and amount funded by levy or co-investment (£)
- Total employer salary cost over apprenticeship period (£)
- Estimated value of apprentice output at different productivity levels (£)
- Net cost or benefit over the apprenticeship duration (£)
- Break-even productivity percentage
Important Notes — 2025/26 Rates & Caveats
Apprenticeship funding 2025: levy-paying employers can fund up to 100% of approved training costs from their Digital Apprenticeship Service account. Non-levy employers pay 5% of training costs; the government funds 95%. Funding bands vary by standard: £3,000 (Level 2 retail) to £27,000 (Level 7 accountancy/legal). Apprentice minimum wage: £7.55/hr for under-19s and first-year 19+ apprentices; full age-appropriate NMW/NLW thereafter. The £3,000 employer incentive for hiring 16-18 year olds is available to all employers. Level 7 apprenticeships (Master's equivalent) are under review — the government has proposed restricting levy funding for these.
Frequently Asked Questions
How much does it cost to hire an apprentice?
The main cost is the apprentice's salary — at minimum £7.55/hr (apprentice NMW) but many employers pay more. Training costs: levy employers fund from their Digital Apprenticeship Service account at no cash cost; non-levy employers pay 5% of the training cost (e.g. £250 for a £5,000 training programme, funded to £4,750 by the government). Additional costs: employer NI (15% above the secondary threshold from April 2025), employer pension contribution (minimum 3%), and line manager time for supervision.
What is the employer incentive for hiring apprentices?
Employers receive a £1,000 payment from the government for hiring an apprentice aged 16-18, or an apprentice under 25 who was previously in care or has a Local Authority Education, Health and Care (EHC) plan. Payments are made in two instalments (at 90 days and at the end of the apprenticeship). Additionally, employers with fewer than 50 employees hiring a 16-18 year old apprentice pay 0% of the training cost (the government funds 100%).
Can a business hire an apprentice to replace an existing employee?
No — apprenticeships must be genuinely new roles or genuine skill development for existing employees in a new and substantively different role. An employer cannot make an existing employee redundant and hire an apprentice to do the same job at lower cost. The apprenticeship must include substantial new learning — at least 20% of working time in "off-the-job training" which is structured learning, not normal work duties. HMRC and the Education and Skills Funding Agency audit apprenticeship programmes.
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