Category Archives: Payroll

The National Living Wage increase – what you need to know


The National Living Wage is the lowest hourly rate that employers can pay their employees who are over the age of 25. People under that age will get the National Minimum Wage.

The new rates

Both the National Minimum Wage and the National Living Wage are increasing in April 2017. The National Living Wage increases from £7.20 an hour to £7.50. For people on the National Minimum Wage there are four bands. Workers from 21 to 24 will see an increase from £6.95 to £7.05 an hour. Between the ages of 18 and 20, the rate rises from £5.55 to £5.60 an hour, and for those under 18 there is a rise from £4.00 to £4.05 an hour.

The fourth band of people are apprentices who will receive £3.50 an hour in April, a rise from £3.40. An “apprentice” is defined as either an apprentice under the age of 19 or, or if older, they are in the first year of their apprenticeship.

Who is entitled to the Minimum and Living Wage?

All employees over the age of 16 and under 25 are entitled to the minimum wage, and all employees over 25 receive the living wage. It does not matter if a worker is part time or full time – they are still entitled to the minimum or living wage. Casual workers, even if they only work one day, must still receive at least the minimum hourly rates. Homeworkers who are paid for what they produce must receive at least the minimum or living wage for the hours that they work.

Who is not entitled to the living wage?

Self-employed people who run their own business are not entitled to claim any minimum hourly rates. Company directors are exempted, and can even choose not to take any remuneration from the business.

Volunteers who work for a charity, voluntary organisation or statutory body are not entitled to any minimum payments. They can receive payments for expenses such as travel or meals, but are not entitled to an hourly wage.

To be safe, outsource

There are penalties for not paying workers the minimum or living wage. To be safe, you can hire an accounting service that can manage your payroll for you in order to make sure that all employees are getting the living wage they are entitled to and are paying the correct tax.

Knowing your business numbers inside out can help you to gain control over your operations. It can also help your business generate higher profit margins, as you will have a better understanding of the cost of your business processes.
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