Increases to National Living Wage & National Minimum Wage

Increases to National Living Wage and National Minimum Wage come into effect for UK employees from next month. Announced by Philip Hammond back in the October 2018 Budget, the increases mean employers will be required by law to pay these new rates as of 1st April 2019.

New wages to be paid from 1st April

Recommended by the Low Pay Commission (LPC), the increase in the National Living Wage (NLW) ensures a pay rise for the lowest-paid workers.

The increase, which exceeds both inflation and average earnings, is set to benefit around 2.4 million workers in the UK. The new rates were announced by the Chancellor of the Exchequer in the 2018 Budget, in line with those recommended by the LPC.

The National Living Wage, the statutory minimum for workers aged 25 and over, will increase by 4.9% to £8.21 per hour.

Rates for younger workers will also increase above inflation and average earnings. Employees must be of school leaving age to get the National Minimum Wage and it applies up to the age of 24. Once employees are 25 and over, they are entitled to get the National Living Wage instead.

What this means for businesses

This increase in wage bills for employers comes at a time when businesses are also facing higher auto enrolment minimum pension contributions for staff. 

The phased increase in pension contributions will apply to all employers with staff in a pension scheme for auto enrolment from 6th April 2019.

Employers must ensure that at least the minimum amounts are being paid into their pension scheme from 6th April, with minimum contributions set to rise from 2% to 3%.

See below for the new rates of National Living Wage (NLW) and National Minimum Wage.

If you need any assistance with cash flow forecasting for your business or advice on payroll, get in touch with our expert team.

Call 01244 400315 or email [email protected].

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