Did you know that National Minimum Wage rates are due to change on 1 April 2023? In our latest blog, Julie Mason, payroll director at PM+M outlines everything you need to know…
What are the current and upcoming rates?
A comparison between the current and future rates for each band are outlined in the table below:
| Rate from April 2022 | Rate from April 2023 | % increase | |
| National Living Wage (NLW) | £9.50 | £10.42 | 9.7% |
| Aged 21-22 rate | £9.18 | £10.18 | 10.9% |
| Aged 18-20 rate | £6.83 | £7.49 | 9.7% |
| Aged 16-17 rate | £4.81 | £5.28 | 9.7% |
| Apprentice rate | £4.81 | £5.28 | 9.7% |
| Daily accommodation offset rate | £8.70 | £9.10 | 4.6% |
As a reflection of the ongoing economic uncertainty, the National Living Wage is set to rise by up to 10.9% going into the new tax year. The increases intend to support the living standards of lower paid workers in light of the cost-of-living crisis.
Things for employers to keep in mind…
As we approach the new tax year, here are some reminders of the most common National Minimum Wage pitfalls that even the largest employers can fall into:
- Employees must not enter a salary sacrifice arrangement which would bring their hourly rate below the National Minimum Wage. Common examples include cycle-to-work schemes, salary sacrifice pension schemes and childcare voucher schemes entered into prior to 4 October 2018.
- The optional £1 administration deduction that can be taken from employees when operating attachment of earnings orders can lead to an underpayment of the National Minimum Wage.
- Where employees are required to purchase a specific uniform as a condition of their employment, this can breach National Minimum Wage regulations as it is expenditure incurred in connection with their employment. This applies regardless of whether the cost of the uniform is deducted directly from the employee or if the employee purchases the uniform from a third-party themselves.
- Beneficial net deductions from employees’ wages, such as for lottery syndicates and savings schemes, can also breach National Minimum Wage regulations. This is regardless of whether the individuals have explicitly opted into such schemes.
Penalties for National Minimum Wage breaches can be costly and could also result in being publicly named and shamed by HMRC, so it certainly pays to be mindful of any potential oversights.
If PM+M provide you with outsourced payroll services, we will assist in the process by uplifting any National Minimum Wage rates automatically in the relevant period, unless we are instructed by you differently (for example, to increase employees to a higher rate).
For further information on our payroll services, please get in touch with Julie Mason, director of payroll at PM+M, using the button below.
