As announced by Chancellor Philip Hammond last year, National Minimum Wage rates are set to increase by up to 5.7% on April 1st 2018.
- The Apprentice minimum wage is increasing from £3.50 to £3.70.
- Under 18’s minimum wage is increasing from £4.05 to £4.20.
- The minimum wage for 18 to 20 year olds is increasing from £5.60 to £5.90.
- The minimum wage for 21 to 24 year olds is increasing from £7.05 to £7.38.
The National Living Wage, which applies to those over the age of 25 and is also a government requirement, is going up too:
- The minimum wage for everyone over the age of 25 is increasing from £7.50 to £7.83.
Minimum Wages are categorised into age ranges with a separate category for Apprentices being introduced in 2010. The wage has been rising steadily year on year since 2009. The increase this year is a positive development for employees in this country, although it is still one of the lowest minimum wages in Europe.
If you’re an employer you need to ensure that your employee wages cover the new National Minimum Wage requirements. Failing to adjust your employee’s wages from April 1st can result in some hefty fines, and also the possibility of being publicly named as an employer failing to reach the minimum required. Definitely something to be avoided!
Employers should also be aware of a few other changes coming in from 6th April 2018. As usual at the start of the tax year, employee tax codes will change. The standard tax code will now be 1185L. Employers will be notified by HMRC of any specific changes to an employee’s tax code, however for all other employees you should adjust their tax codes as follows:
- Tax codes ending in a L should be increased by 35
- Tax codes ending in a M should be increased by 39
- Tax codes ending in a N should be increased by 31
April also sees the first increase to the auto enrolment pension rates. Previously the employee had 1% of their salary deducted, while the employer contributed a further 1% on top. With effect from April 6th, employees will be required to have 3% deducted, while the employer will now need to pay a further 2%.
As an employer, it is your responsibility to ensure that you meet the minimum wage, tax code and auto enrolment pension requirements for your employees. It is so very important to ensure that your payroll software is up to date and that the data entered and submitted to HMRC and to your pension provider is correct.
If you are struggling to get to grips with payroll, then don’t hesitate to get in touch. We can supply you with training to ensure that you’re getting your payroll processes right, or we can take it off your hands completely and do it for you if you prefer!