Why the new minimum wage makes apprenticeships a smart money-saving move for employers?

Yesterday’s Budget 2025 announcement from the Government has confirmed what many employers feared: payroll costs are set to rise significantly.

Chancellor Rachel Reeves has accepted the Low Pay Commission’s recommendations in full, confirming that from April 2026, the National Living Wage will jump to £12.71 per hour. While this is great news for workers, it places a heavy burden on businesses, especially SMEs already navigating the recent rise in Employer National Insurance to 15%.

But for employers who use apprenticeships, there are still powerful ways to control wage costs, claim tax and funding reliefs, and grow your own skilled workforce at the same time.

At MITSkills, we have crunched the numbers, and the results are clear. By hiring an apprentice instead of a standard employee, your business could save an impressive £13,000+ in the first year alone, while gaining a loyal, skilled team member.

This blog explains what’s changed, what the government is offering employers who take on apprentices, and how MITSkills can help you make the most of it. Let’s look at the reality of the costs coming in April 2026.

The Salary Saving

From April 2026, the National Living Wage (for workers 21+) rises to £12.71.

In contrast, the new National Minimum Wage for Apprentices (and 16-17 year olds) will be £8.00.

For a full-time role (37.5 hours/week), the difference is stark:

• Standard Employee (21+): ~£24,785 per year
• Apprentice: ~£15,600 per year
• Immediate Wage Saving: £9,185

The “Hidden” Tax Saving (National Insurance)

This is the “other exemption” savvy employers are using.

• Standard Employee: With the Employer NI rate now at 15% and the secondary threshold lowered to £5,000, you will pay approx. £2,967 in NI contributions for a full-time worker on the National Living Wage.
• Apprentice (Under 25): You pay £0 in Class 1 National Insurance on earnings up to £50,270.
• Tax Saving: ~£2,967

The New Budget Bonus: 100% Fully Funded Training

In a major win for small and medium-sized businesses (SMEs), the Chancellor announced yesterday that the government will now pay 100% of the training costs for apprentices aged under 25.

• Previously: You had to pay a 5% “co-investment” fee.
• Now: £0 cost to you for training.

The £1,000 Cash Incentive

If you hire an apprentice aged 16-18 (or 19-25 with an eligible Education, Health and Care plan), the government pays you a £1,000 cash grant.

Total Estimated First-Year Savings

Cost Factor	Standard Employee (21+)	Apprentice (16-18)	Your Savings
Annual Wage	£24,785	£15,600	£9,185
Employer NI (15%)	£2,967	£0	£2,967
Training Cost	£0 (no training)	£0 (Fully Funded)	£0
Cash Incentive	£0	-£1,000 (Grant)	£1,000
TOTAL COST	£27,752	£14,600	£13,152

(Calculations based on 37.5hr weeks. Figures are estimates based on April 2026 rates).

Why apprenticeships make strategic sense in a high-wage environment

The Budget announcement essentially locks in higher wage floors across the workforce through 2025 and 2026. If you carry on recruiting exactly as before, you’ll simply absorb higher costs.

Apprenticeships offer a different route:

• Cost control for entry-level roles
  Use the apprentice rate legally in year one, plus NIC relief and funding support, to reduce total employment costs while still paying fairly and investing in development.
• Future-proofed skills
  Apprentices train to approved standards aligned with industry needs. You’re not just filling a vacancy; you’re shaping a future supervisor, technician or manager.
• Improved retention
  Apprentices who grow with your business are often more loyal. Government research on NIC relief shows many employers value apprenticeships for building long-term talent, not just short-term savings.
• Stronger employer brand
  Demonstrating that you invest in training and development makes you more attractive to young people, local communities and future applicants.

In other words, apprenticeships are one of the few ways to manage rising wage costs and strengthen your workforce at the same time.

Why Choose MITSkills?

Saving money is crucial, but building a workforce that fits your business is better. Apprenticeships allow you to train staff in your methods, culture, and systems from day one.

At MITSkills, we act as your recruitment and training partner. We:

• Source Candidates: We find eager, work-ready local talent.
• Handle the Paperwork: We guide you through the government service account, grant applications, and NI exemptions.
• Deliver Top-Tier Training: From Business Admin and IT to Construction and Engineering, our training ensures your apprentice adds value fast.

Act Now Before April

The new wage rates hit in April 2026, but the smart businesses are recruiting now. By onboarding an apprentice today, you prepare your workforce for the future and lock in a sustainable cost structure before the new financial year begins.

Don’t let the Budget squeeze your margins. Use it to grow your team.

Contact MITSkills Today to Post Your Vacancy!

Let’s build your future workforce, together.