The National Minimum Wage (NMW) and National Living Wage (NLW) are set to increase from 1st April 2018. This includes the largest increases in a decade for the rates that apply to 18-20 and 21-24 year olds. The National Minimum Wage is the minimum pay per hour most workers are entitled to. However, workers aged 25 and older are instead entitled to the National Living Wage.
If you are a director, the National Minimum Wage and National Living Wage do not apply and so you don’t have to worry. However, if you have any employees working for your company, you will need to ensure you are paying them the correct minimum wage. The rates are updated each April, so it’s an extra check to be aware of as well.
The hourly rate for the minimum wage depends on the worker's age and whether the worker is an apprentice. From the 1st April 2018, the statutory rates will increase to:
|
|
Rate |
Age Range |
|
Apprentice |
£3.70 |
In first year of apprenticeship, no qualifying age. Under 19 and in apprenticeship. |
|
NMW |
£4.20 |
Under 18 |
|
|
£5.90 |
18-20 |
|
|
£7.38 |
21-24 |
|
NLW |
£7.83 |
25 and over |
There are heavy penalties for not paying your employees National Minimum Wage or National Living Wage. You will be required to pay any arrears immediately and have penalties to pay as well. Penalties can be up to 200% of the arrears up to a maximum of £20k per worker. On top of this HMRC can also ‘Name and Shame’ employers who have not followed minimum wage rules.
You can check you have been paying your employees the correct minimum wage using HMRC’s Minimum Wage Calculator. Should you find you haven’t been paying the correct minimum wage, you will need to increase the employee's rate, and pay any arrears owed straight away. If you are unsure or would like to go through this in more detail, please contact your dedicated accountant and we’ll be happy to help.
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