Employers usually pay no employer National Insurance on apprentices under 25, up to a set earnings limit. That makes an apprentice noticeably cheaper to employ than another new starter, and with government funding covering most of the training, apprenticeships are one of the lower-cost ways to grow a team.
If you run a business in Somerset, or elsewhere in the South West of England, the cost of hiring new staff can feel like a constant brake on growth. Salary is only part of the picture; once you add employer pension, holiday pay and National Insurance, each new role can look expensive very quickly. It is no surprise that many owners put off recruitment or rely on short term fixes rather than building a long term pipeline of talent.
What often gets missed is that the National Insurance rules work differently for apprentices, especially younger apprentices on approved UK apprenticeships. In some cases, you can legally avoid paying employer National Insurance on their wages altogether, while still giving them proper training and a recognised qualification. Used well, these incentives make government apprenticeships a smart way to grow your South West team without putting pressure on cash in the same way as a standard hire.
How National Insurance affects the real cost of hiring
Before looking at incentives, it helps to understand how National Insurance normally behaves within your payroll costs. Employer National Insurance is charged as a percentage of your employees’ earnings above a certain threshold, so as wages rise your cost per employee rises too. For small and medium businesses in Yeovil, Taunton and across the South West, that percentage can make the difference between a role feeling affordable or not.
Because National Insurance is calculated per employee, adding one more person to the payroll often feels like a big decision. Even if you are confident in the work pipeline, you may hesitate because you know that once someone is on the books, you carry that cost every month. This is where the National Insurance reliefs linked to government apprenticeships become powerful; they allow you to bring new people in on a structured training programme while reducing one of your main on-costs.
National Insurance incentives for Government apprenticeships
The UK government has created specific National Insurance reliefs for qualifying apprentices, particularly those under 25 on approved government apprenticeships. If certain conditions are met, employers may not have to pay Class 1 employer National Insurance on their wages up to a set earnings limit. For a South West employer running on tight margins, that saving can be significant over the course of a year.
These incentives sit alongside funding support for UK apprenticeships, helping to tackle both training costs and payroll on-costs at the same time. In practice, this means you can often hire an apprentice in Somerset or for a lower overall cost than a traditional junior employee, while still giving them structured training and external accreditation. That combination is one reason why more businesses are looking again at business apprenticeships as part of their workforce strategy.
At a glance: National Insurance and apprenticeships
| Type of employee | Age / status | National Insurance position for employer | Typical use case for South West SMEs |
|---|---|---|---|
| Standard employee | Any age, not an apprentice | Employer pays Class 1 National Insurance | Existing staff; experienced hires |
| Qualifying apprentice under 25 | Under 25 on approved UK apprenticeship | Employer may pay no Class 1 National Insurance up to earnings limit | New hires on government apprenticeships; upskilling young staff |
| Apprentice 25 and over | 25+ on approved apprenticeship | Employer pays National Insurance as normal | Older career changers; upskilling existing team members |
You still need to make sure your apprentice and scheme meet the relevant criteria, but once they do, the National Insurance savings are built into every payroll run without extra paperwork each month.
Turning National Insurance savings into Business apprenticeships
The obvious question is what to do with the money you save on National Insurance. One option is simply to treat it as a welcome reduction in cost. A more strategic approach is to reinvest part of that saving into better quality business apprenticeships, so you end up with stronger people as well as reduced overheads.
For example, you might use the National Insurance saving to: increase the apprentice’s training time slightly so they can attend more workshops or coaching; invest in higher quality learning resources; or fund internal mentoring time so line managers in Yeovil or Taunton can support the apprentice properly. Over time, this can turn a basic apprenticeship into a well supported development route that genuinely strengthens your operations.
Where Business apprenticeships add most value
Business apprenticeships can support a wide range of office and operational roles that many South West SMEs rely on every day. Popular areas include:
- Administration and office support: building reliable processes around customer queries, paperwork and scheduling;
- Finance and bookkeeping: supporting invoices, credit control and basic reporting with proper training;
- Customer service: helping apprentices learn how to handle customers across Somerset and in a consistent, professional way;
- Business operations: supporting workflow, stock, logistics or project coordination, depending on your sector.
By aligning these roles with National Insurance incentives, you can often create new positions earlier than you otherwise would, easing pressure on you and your existing team.
Using UK apprenticeships to build a talent pipeline
UK apprenticeships now cover a wide range of technical and professional standards beyond traditional trades. That means you can use them not only for entry level roles, but also for more specialist functions that are hard to recruit for in the South West. When you combine that variety with National Insurance relief for younger apprentices, the business case becomes stronger again.
For instance, a digital agency in Somerset might use government apprenticeships in digital marketing or IT support, while an engineering or construction firm in might focus on technical apprenticeships. Many businesses also use apprenticeships to upskill existing staff, particularly when they want to create supervisory roles or strengthen internal expertise. Even where National Insurance relief does not apply because the apprentice is over 25, the funding support can still make upskilling more affordable than hiring externally.
Planning your apprenticeship mix
A useful starting point is to map your future workforce needs rather than just filling today’s gaps. Ask questions such as: which roles are currently stretched; where do you expect demand to grow in the next two to three years; and which skills are hardest to find locally in Taunton, Yeovil or surrounding towns. From there, you can decide which government apprenticeships or business apprenticeships would make the biggest difference if you could bring them in sooner, supported by National Insurance savings.
Practical steps to access National Insurance incentives
The rules around National Insurance and apprenticeships can feel technical, but the practical steps are manageable once you break them down. The key is to check eligibility early and document your decisions so everything is clear for your payroll provider and for HMRC if they ever ask questions.
Typical steps include: clarifying the roles you want apprentices to fill; choosing appropriate UK apprenticeships and training providers; checking whether potential apprentices meet the age and programme criteria for National Insurance relief; setting up your payroll to apply any National Insurance exemptions correctly; and monitoring wage levels so you know if or when the relief no longer applies. For many South West businesses, this is an ideal area to discuss with a trusted accountant or advisor who understands both apprenticeship funding and wider business planning.
Example: using National Insurance savings in a South West business
Imagine a Yeovil based firm that wants to add capacity in admin and finance but is worried about the ongoing cost of full time staff. By hiring two apprentices under 25 on approved business apprenticeships, they may benefit from reduced employer National Insurance, while government funding covers most of the training fees. The cash saved on National Insurance can be reinvested into better internal processes, software or mentoring, helping the apprentices become productive more quickly and supporting the wider team.
How Wessex Commercial helps you make sense of National Insurance
National Insurance is only one piece of the puzzle; to make good decisions, you also need clarity on profit, cash flow and longer term plans. Wessex Commercial works with business owners across Somerset and the wider South West to model how government apprenticeships and National Insurance incentives fit into their overall financial picture. That means going beyond a simple “yes or no” and looking at how apprenticeships support your strategy, margins and workload over the next few years.
We can help you understand the true cost of hiring, including salary, National Insurance, pension and training and compare that with the expected value of extra capacity or new skills. We can also support you in building forecasts that show how business apprenticeships and UK apprenticeships feed into revenue growth, profitability and eventual exit value. For some owners, that may be the confidence they need to move from “We cannot afford extra staff” to “We can afford them if we structure roles and apprenticeships in the right way.”
Combining apprenticeships with wider planning
Because we combine chartered accountancy with advisory and coaching, we can also help you connect National Insurance and apprenticeship decisions to other areas such as pricing, process improvement and business systems. That might mean reviewing your margins so the extra capacity delivered by apprentices feeds through to profit; improving systems so new team members can be productive quickly; or building a longer term plan for how today’s apprentices could become tomorrow’s supervisors or managers in your South West business.
National Insurance and apprenticeships: time to review your options
National Insurance will always be a cost of employing people, but the way you structure your South West team can make a big difference to how heavy that cost feels. For small and medium businesses in Somerset, Yeovil, Taunton and the wider South West, using National Insurance incentives linked to government apprenticeships can open up options that previously felt out of reach. You gain extra hands and fresh energy while keeping on-costs under control.
If you have dismissed apprenticeships in the past as complicated or only relevant for large employers, it may be time to look again. With the right mix of business apprenticeships and UK apprenticeships, you can build a pipeline of talent that fits your culture and your customers, supported by genuine savings on National Insurance.
Wessex Commercial can help you review your workforce plans, understand the financial impact of apprenticeships and design a practical approach that fits your ambitions. If you are ready to explore how National Insurance incentives could make apprenticeships a smart business move for your organisation, now is a good moment to start that conversation.
References
business advice services: https://www.wessexcommercial.com/services/business-advice/
Business advice and support: https://www.wessexcommercial.com/sub-services/business-advisory-coaching-support/
5 Key Ways Accountancy Services Can Drive Your Business Growth in 2026: https://www.wessexcommercial.com/5-ways-accountancy-services-drive-growth/
Employing an apprentice: employer guidance: https://www.gov.uk/employing-an-apprentice
Paying employer National Insurance contributions for apprentices under 25: https://www.gov.uk/government/publications/national-insurance-contributions-for-under-25s-employer-guide/paying-employer-national-insurance-contributions-for-apprentices-under-25
Funding an apprenticeship for non-levy employers: https://www.apprenticeships.gov.uk/employers/funding-an-apprenticeship-non-levy