Are you prepared for the national living wage increase?
From April 2021, the National Living Wage (NLW) and the National Minimum Wage (NMW) will see an increase.
The Low Pay Commission (LPC) has recommended that the NLW should increase by 2.2% from £8.72 per hour to £8.91 per hour. The age threshold will also be amended from 25 to 23. This follows a review by the LPC in the autumn of 2019. The threshold will then reduce to 21 in 2024.
For those workers aged under 25, the LPC put forward a smaller increase of the following:
- 21-24 an increase of 2.0%, £8.20 per hour will rise to £8.36 per hour.
- 18-20 an increase of 1.7%, £6.45 per hour will rise to £6.56 per hour.
- 16-17 an increase of 1.5%, £4.55 per hour will rise to £4.62 per hour.
The rate for apprentices will see the largest increase of 3.6% which will mean an hourly rate of £4.15 will go up to £4.30.
The pandemic has meant the LPC has resisted changing the Government’s target of the NLW reaching two-thirds of median earnings by 2024. The Government also announced in their November 2020 spending review an increase in the income tax personal allowance for 2021-2022.
Employers need to ensure they are paying the increased minimum pay levels otherwise they could face a penalty and the prospect of being named and shamed by HMRC. By outsourcing your payroll to the experienced Clear Vision Financial Management team, you an ensure that you are meeting all of the requirements and latest legislation.
Sean Daniel, Managing Director said “Employers need to ensure they are prepared for the increase in national living wage to avoid any penalties”.
Clear Vision Financial Management are a team of accountants based in Romsey and Poole, if you would like any advice on funding, or any of the issues in this post please do get in touch. You can call us on 01794 330025 or email us.