Hiring your first apprentice is a big milestone. It brings fresh energy into your business, helps build future talent, and often comes with government support. But when it comes to payroll, apprentices have their own set of rules — and getting it wrong can lead to underpayments, compliance issues, or missed funding opportunities.
At Lucas White Payroll Services Ltd, we support employers across the UK with payroll for apprentices, ensuring they meet every requirement from day one. If you are about to take on your first apprentice, here is what you need to know.
1. Understand Apprentice Pay Rates
Apprentices have a different minimum wage rate, especially in their first year or if they are under 19. As of April 2025, the National Minimum Wage for apprentices is £6.40 per hour. After their first year, apprentices aged 19 and over must be paid the standard minimum wage for their age group.
It is important to apply the correct rate based on age and apprenticeship length. Incorrect pay is one of the most common issues we see, and it can lead to penalties or back pay claims.
2. Set Up PAYE If You Haven’t Already
If this is your first hire, you will need to register as an employer with HMRC and set up a PAYE scheme. This allows you to deduct tax and National Insurance and report to HMRC through Real Time Information (RTI).
Our team can help you register, set up payroll correctly, and ensure everything is in place before your apprentice starts.
3. Factor in National Insurance Relief
You may be eligible for National Insurance relief when employing an apprentice under the age of 25. This relief means you pay a lower rate or no employer NICs on their wages, depending on earnings.
It is a valuable saving, but it requires your payroll system to apply the right category letter and ensure the apprentice’s details are set up correctly. We handle all of this as part of our managed payroll service.
4. Track Hours and Training Time
Apprentices must be paid for both working hours and off-the-job training. This includes time spent at college or with a training provider. You will need to track and record this time to ensure correct payment and compliance with the apprenticeship agreement.
We help employers structure payroll to account for varied hours and keep records clear and consistent.
5. Submit Payroll and Pensions Correctly
Your apprentice will need to be included in your usual payroll process, including payslips, pension assessments, and HMRC submissions. Depending on their age and earnings, they may need to be auto-enrolled into a workplace pension.
If they are not eligible, you still have legal duties to assess them and issue a notice. We take care of pension assessments and communications as part of our fully managed service.
6. Keep Paperwork in Order
Make sure you have an apprenticeship agreement in place, along with any contracts, starter forms, and identity checks. These documents support both your legal obligations and your payroll records.
Accurate paperwork helps prevent issues if your business is ever audited or if funding bodies request evidence of compliance.
Need Help Setting Up Payroll for an Apprentice?
Taking on an apprentice is a great step for your business, but it comes with a few extra responsibilities. At Lucas White Payroll Services Ltd, we make the payroll side easy. We handle the setup, calculate everything correctly, and help you stay compliant from day one.
Book a free consultation to find out how we can support you with apprentice payroll and make the process smooth, stress-free, and fully managed.
