Answer
The National Living Wage and the National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. The rates below apply from 1st April 2018:
The £7.83 hourly rate is labelled the National Living Wage; the other rates are referred to as National Minimum Wage rates.
Remember there are concessions regarding Employer’s National Insurance contributions for the younger members of staff and apprentices, but you must make sure they have the correct National Insurance category letter.
To understand what the impact of the increase is, here’s an example of how much extra the new living wage rate of £7.83 would cost you for a staff member working 35 hours per week:
(£7.83 - £7.05) x (52 weeks x 35 hours) = 78p x 1,820 hours = £1,419.60
Furthermore, there would be Employer’s National Insurance at 13.8% of £195.90.
So all-in-all, this employee would cost an additional £1,615.50 a year from 1st April 2018.
TaxAssist Accountants offer payroll services, including looking after Benefit in Kind Forms P11D and ensuring you’re compliant with Auto Enrolment. For more information, contact your local TaxAssist Accountant.
Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Ed Coton specialises in managing tax and accountancy affairs for small businesses. For more information about the topics covered above contact
01823 218258 edcoton@taxassist.co.uk
