The UK Government has confirmed new increases to the National Minimum and Living Wage rates coming into effect from 1st April 2023.

Following the recommendations made by the Low Pay Commission, the UK Government has announced significant increases in National Minimum Wage (NMW) and National Living Wage (NLW) rates effective from 1st April 2023.

The Government hopes that the increases to the National Minimum Wage will help support low-paid workers in the face of rising living costs. However, critics argue that these increases will force employers to bear the extra costs of the current cost of living crisis.

What are the new rates?

As of 1st April 2023, the new NLW/NMW rates will be as follows:



Rate from April 2023 The current rate (April 2022 to March 2023) Annual increase (£) Annual increase (percent)
National Living Wage (23 years and above) £10.42 £9.50 0.92 9.7
21-22 year olds £10.18 £9.18 1.00 10.9
18-20 year olds £7.49 £6.83 0.66 9.7
16-17 year olds £5.28 £4.81 0.47 9.7
Apprentices £5.28 £4.81 0.47 9.7
Accommodation Offset £9.10 £8.70 0.40 4.6

To read the recent Government article regarding minimum wages in full, please visit the GOV.UK website.

What does the National Minimum Wage increase mean for employers?

This significant increase puts additional financial pressure on employers. HMRC is actively reviewing National Minimum Wage compliance, and if underpayments are discovered, the cost of making good all underpayments will be uplifted to the current NLW/NMW rate when paid – not the rate in force at the time the underpayment occurred.

In addition to the financial ramifications, employers also risk reputational damage as HMRC will publicly ‘name and shame’ those who are found to have paid employees below NMW rates.

Are you fulfilling your requirements as an employer?

Employers frequently make inadvertent errors due to the complexity of the National Minimum Wage rules. Common problems area employers face include:

  • Verifying and identifying all working time
  • Inadvertently using uplifted overtime rates when calculating effective NMW rate in the pay period
  • Failing to identify deductions that impact on and reduce pay for NMW purposes.

If a salary sacrifice arrangement is in place, the rate of pay after salary sacrifice must be at or above the applicable NLW/NMW rate. Employers need to consider the impact of the rate increases before 1st April 2023.

How PKF Smith Cooper can help

As an employer, understanding the changes to the National Minimum Wage and the impact it has on your business can be confusing. As a result, many businesses often misinterpret their NMW obligations, putting themselves at risk of being fined.

Here at PKF Smith Cooper, we believe prevention is better than cure. By helping you to understand and take control of your NMW requirements, we can ensure that your business remains compliant.

If you have any concerns about how the increases to the National Minimum Wage and National Living Wage may affect you as an employer, please contact our Employment Tax team.