The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
They’ve been talked about for a long time – and now they are finally heading our way.
The changes to the National Minimum Wage (NMW) are on the horizon for employers and employees.
The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid.
NMW rates increases come into effect on 1 October 2015.
From 1 October 2015:
- the adult rate will increase by 20 pence to £6.70 per hour
- the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
- the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
- the apprentice rate will increase by 57 pence to £3.30 per hour.
This will initially be set at £7.20 which is a 50p increase in the adult rate of NMW coming into force in October 2015.
This represents an increase of in excess of £1,200 per annum in earnings for a full-time worker on the current NMW.
The NMW will continue to apply for those aged under 25.
The government says that this is the largest real-terms increase in the National Minimum Wage since 2007, and more than 1.4 million of Britain’s lowest-paid workers are set to benefit.
Penalties may be levied on employers where HMRC believe underpayments have occurred and HMRC may 'name and shame' non-compliant employers.
Please contact Clay Shaw Butler if you would like help with payroll issues.
The Government has issued further details of the new NLW policy . . . here is their statement -
About the new National Living Wage:
The government wants to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.
With record employment, the highest GDP growth in the G7, over 2 million jobs created since 2010, and 1.1 million more forecast by the Office for Budget Responsibility (OBR), the government believes that now is the right time to take action to ensure low wage workers can take a greater share of the gains from growth.
The new National Living Wage is an essential part of this. It ensures that work pays, and reduces reliance on the state topping up wages through the benefits system.
Rates:
From April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 70p relative to the current National Minimum Wage (NMW) rate, and 50p above the increase coming into force in October. That’s a £1,200 per annum increase in earnings for a full-time worker or the current NMW.
The adult NMW rate is currently £6.50.
It will increase to £6.70 from October 2015.
From April 2016 the premium will come into effect on top of the NMW, taking the National Living Wage to £7.20.
The NMW will continue to apply for those aged 21+, with the premium added on top for more experienced workers taking the total hourly rate to the National Living Wage.
Low Pay Commission and future rates:
The government published the Low Pay Commission’s (LPC) new remit on 8 July 2015.
The government is asking the LPC to recommend the level of the path of the National Living Wage going forward, with the target of the total wage reaching 60% of median earnings by 2020.
The LPC will also continue to provide recommendations for the other NMW rates as they have done previously.
You can find out more about money matters on the new-look Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
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