Apprenticeships are programmes of combined work and study that lead to a recognised qualification. You are paid whilst undergoing the training – but how much?
Pay Structure for Apprenticeships in England
As an apprentice, you’re legally entitled to the National Minimum Wage. And this should be clearly stated in your employment contract.
Current apprenticeship rates are:
- Age 16 to 18: £4.30 per hour
- 19+ and in your first year of apprenticeship: £4.30 per hour
- 19+ and finished your first year of apprenticeship: National Minimum Wage or Living Wage rate for your age group (see below)
Current Minimum Wage hourly rates are:
- Under 18: £4.62
- 18 – 20: £6.56
- 21 – 22: £8.36
- 23+: £8.91 (This is the National Living Wage
Apprenticeships are open to all ages. But are most popular for younger people. And when you look at the pay rates, you can see why. It would be unaffordable for someone to maintain a mortgage and other normal living costs on an apprenticeship rate. But for young people still living at home, an apprenticeship programme might be the perfect next step in their employment journey – if their family can afford to support them.
Are apprentices taxed?
Apprenticeship pay is still considered income, therefore it’s subject to the same income tax as everyone else.
But don’t forget about your Personal Allowance. This is the amount you can earn without paying any tax. In 2021-22 the Personal Allowance rate is £12,570. All taxpayers earning less than this amount don’t pay any income tax at all.
On your apprenticeship rate, this is going to be you. Unless you have another job or source of income that takes you over that threshold.
As an apprentice, your tax is all worked out and paid through the Pay As You Earn system. (This is usually called PAYE.) You don’t have to do anything to pay your tax, it will come out of your pay before you get it.
If you’re doing any self-employed work at the same time, you’ll need to use the Self Assessment system to tell HMRC about your earnings and pay the correct tax on this separate income.
What about National Insurance Contributions?
Again, your National Insurance Contributions (NICs) are based on the amount you earn.
For the 2021-22 tax year
Income over £184 per week: pay Class 1 NICs at a rate of 12% of earnings between £184 and £967. Anything over £967 per week is an extra 2% NICs.
If you earn between £120 and £184 per week, you don’t have to pay Class 1 NICs, but your NIC record is maintained with NIC credits. This is important because it means that your state pension accumulates correctly and that you’re eligible for certain benefits, should you need them.
What hours am I getting paid for, as an apprentice?
When you sign on for an apprenticeships, your provider must meet certain criteria. As specified by HMRC:
“You must be paid for:
- your normal working hours
- training that’s part of your apprenticeship (at least 20% of your normal working hours)
- study towards English and maths qualifications, if they’re part of your apprenticeship”
Your entitlement also includes 20 paid days holiday a year and Bank Holidays.