Minimum Wage and Living Wage Changes for 2018
Beginning 1 April 2018, changes to the National Minimum Wage rates will go into effect. Companies will be required to pay employees over age 25 a minimum of £7.83 per hour, up from £7.50 last year. There are also new minimum wage rates for employees between 21 and 24 years of age and apprentices. The personal allowance is also changing from £11,500 to £11,850 which allows individuals to retain more of their income before being taxed.
National Minimum Wage (over 25 years old)
National Minimum Wage (ages 21 – 24 years)
The 4.7% increase to the National Minimum wage in 2018 is still below the National Living wage (£10.20 per hour in London and £8.75 elsewhere), but the Living wage is calculated based on basic cost of living, and is voluntary for employers. The National Minimum wage is required by law for employees over age 25 and there are strict fines and penalties for non-compliance.
There are some exceptions to the law, including volunteers, apprentices, and some agricultural workers, but it is important to comply with the new regulation or face up penalties of 200% of the amount owed. Companies that need assistance with payroll or wage changes should consider using online payroll services to ensure compliance.
HMRC is spending more than £25m on enforcement of the National Minimum wage this year, and will fine employers 200% of the amount owed, or up to £20,000 per employee. Companies will also be publicly “named and shamed” in the annual report which lists the amount and number of employees affected. This year, 233 companies were named in the annual report from HMRC, detailing how much money they owed to workers.
If you need help complying with the new changes, or would like to simplify your payroll, contact us to discuss customized payroll solutions for your business.
Need help to understand what solution is best for your business?
Payescape Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (register number 821826) for the provision of payment services.