The government has announced plans to boost the National Living Wage to end low pay and tackle the rising cost of living, providing the low earners with the biggest increase to the National Minimum Wage to date.

The decision was informed by the Low Pay Commission, an independent body who advises the government on National Living and National Minimum wages. Almost 3 million people are set to benefit from the increased rates.

What is changing?

As from 1 April 2020, the changes to National Minimum Wages will be as follows:

  • A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
  • A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
  • A 4.6% increase from £4.35 to £4.55 for Under 18s
  • A 6.4% increase from £3.90 to £4.15 for Apprentices

The National Living Wage, which is only applicable to those aged 25 or older, will increase 6.2% from £8.21 to £8.72 as from 1 April 2020, four times the rate of inflation.

Employer impact

The increase will inevitably have a cascade effect and put more pressure on businesses, with some concerned about the impact on employment costs, particularly whilst trying to preserve existing pay structures. Some businesses have called on the government to reduce expenses elsewhere, to offset these rising costs.

Need help with your payroll?

We understand that being an employer is difficult, which is why we offer a holistic payroll service that manages your entire payroll process for you in a time and cost-efficient way that maximises your opportunities as an employer whilst ensuring compliance.

Chloe Hughes, Head of Payroll at Smith Cooper, and her team offer the necessary services that address any manner of payroll needs, however complex, mitigating risk and implementing bespoke solutions along the way. Want to know more about how we can help? Get in touch with our dedicated payroll team today.

Alternatively, if you are an employer and concerned about how the increases to National Minimum Wage and National Living Wage may affect you, please get in touch with a member of our Employment Tax team.