New National Living Wage Rates
What is the National Living Wage?
The National Living Wage is the legal minimum all staff must be paid per hour, based on their age. Rebranded in 2016, you may remember that the National Living Wage used to be called the National Minimum Wage.
How will the National Living Wage change affect your business?
The rates are set to change by what looks like only a small amount but remember that these are hourly rates and across large workforces, the cost is likely to be tough for businesses to take but great for employees:
|April 17||April 18||% increase|
|21 to 24 years||£7.05||£7.38||4.7|
|25 years +||£7.50||£7.83||4.4|
The apprentice wage bracket sees the best of the increase by an additional 5.7% onto their rate, whilst under 18 year olds has the lowest increase with 3.7% extra.
How will this affect the workforce?
For small to large businesses, the increase will see higher salaries and with it higher contributions to pensions and maternity pay for example. Many of our customers have already found ways to offset this increase by using vehicle tracking to reduce other costs such as fuel usage or planning more cost-efficient journeys.
What does the future look like?
Chancellor, Philip Hammond, has stated that he’s aiming to increase the National Living Wage to £9 by 2020. This is just the first step in a gradual increase for businesses so they can adapt to the change.
Minimum Pension Contribution
From April the 6th 2018, the employer must pay a minimum of 2% of the employee's salary - an additional cost to the business from the current 1%. The employee contribution is also increased to 3%, businesses need to ensure that they have amended the payroll to deduct this higher amount going forward.
Tax personal allowance increase
Hammond also announced in his 2017 Budget that the UK personal allowance (that you can’t be taxed on) is rising to £11,850.
Marriage transfer allowance
As a reminder to all your staff, one spouse can transfer up to £1,850 of their tax allowance to their spouse as long as the receiving spouse earns less than £45k per year, this will help reduce the tax of the higher earning partner.