edit living wage

New National Living Wage

The Government’s new National Living Wage comes into force on 1st April 2016, with workers aged 25 years or over being legally entitled to receive at least £7.20 per hour, unless in the first year of an apprenticeship. That’s 50p extra per hour to the current National Minimum Wage. This will be compulsory, with the Low Pay Commission recommending future rises to the Government in an aim to increase it to £9 an hour by 2020.

Employers must ensure they are paying staff correctly from 1st April as the National Living Wage will be enforced as strongly as the current National Minimum Wage. It is a criminal offence for employers not to pay someone the correct amount.

The Office for Budget Responsibility has estimated that the cost to businesses will amount to 1% of profits. To offset that cost, the Government is cutting Corporation Tax to 19% in 2017 and 18% in 2020. Firms will also benefit from a cut in their National Insurance contributions.

From April 2016 the Employment Allowance will be increased by 50% to £3,000, which means a firm will be able to employ four people full time on the new National Living Wage and pay no National Insurance at all.

The National Minimum Wage rates for workers aged 24 and under remain the same, as follows:

Year                              21 to 24        18 to 20              Under 18         Apprentice

2015 (current rate)   £6.70                  £5.30                  £3.87                £3.30

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