Rate of record
Apprentice rate vs 18-20 rate
The apprentice rate is £8.00/hr; the 18-20 minimum wage is £10.85/hr. For an employer the apprentice route saves about £4,400/yr per head at 30 hours, but the eligibility window is narrow and the wage shifts the day it ends.
The headline rates
Annual gap at 30 contracted hours
- Apprentice annual gross: £12,480
- 18-20 annual gross: £16,926
- Employer headline saving: £4,446 per apprentice per year
That figure is the apparent saving versus a non-apprentice 18-20 hire at the same contracted hours. It does not include the off-the-job 20% rule (below), employer NI, or the apprenticeship levy/co-investment. For levy-paying employers (annual pay bill >£3m), training is funded from the levy pot; for non-levy payers, government co-investment covers 95% of approved training costs.
The day the rate shifts
The apprentice rate stops applying the moment both of the following are true: the apprentice is 19 or older, AND they have completed the first year of their apprenticeship. From that pay-reference period onwards the employer must pay the age-band NMW: £10.85/hr for 18-20, £12.71/hr for 21+.
This is the most common NMW underpayment finding in apprenticeships - failure to uplift on the first pay reference period after the anniversary. HMRC pays particular attention to it in naming-round investigations; back-pay is owed for every hour underpaid since the eligibility ended.
Off-the-job training: the 20% rule
A funded apprenticeship requires the apprentice to spend at least 20% of normal working hours on off-the-job training (down from the previous 6 hours/week minimum; aligned to the apprentice's contracted hours from August 2022)gov.uk. That time is paid at the apprentice rate too, and counts toward NMW hours. Employers who don't track it lose levy funding and risk an underpayment finding if the apprentice is doing more productive hours than the contract claims.
When the apprentice rate is the wrong choice
The apprentice rate exists to subsidise structured training, not cheap labour. The three situations where employers reliably get it wrong:
- Hiring a 19-or-older worker on a "fake" apprenticeship with no approved standard, no end-point assessment plan, and no off-the-job hours. The contract is void as an apprenticeship; the worker is owed full age-band NMW back-pay.
- Continuing the apprentice rate into year two for a 19+ apprentice (see above).
- Counting unpaid training hours as "outside" working time. If the training is required by the apprenticeship and supervised, those hours are NMW hours and must be paid.