As announced in the Autumn Statement 2023, the National Minimum Wage (NMW) is increasing with effect from 1st April 2024.
In addition to the rates increasing, eligibility for the National Living Wage will be expanded as the starting threshold is reduced to 21 year olds for the first time, with the discontinuation of the 21 to 22 year old age category for the National Minimum Wage.
National Minimum Wage – effective from 1 April 2024
| Age threshold | NMW Rate per hour | Increase in £ per hour | % increase | Minimum annual salary based on 40 hours per week |
| 21 years and over (National Living Wage) | £11.44 | £1.02 | 9.8% | £23,795.20 |
| 18 – 20 years | £8.60 | £1.11 | 14.8% | £17,888.00 |
| 16 – 17 years | £6.40 | £1.12 | 21.2% | £13,312.00 |
| Apprentice | £6.40 | £1.12 | 21.2% | £13,312.00 |
As employers, there are a number of steps that you have to take to ensure you are fully compliant with the changes.
If your payroll is run through a bureau such as RPG Chartered Accountant’s Payroll Services, they will ensure that your payroll is compliant and will liaise with you on any further actions that you need to take as an employer.
If you run the payroll yourself, some of the payroll software providers (especially those with cloud services) may make background changes to ensure that changes are made to the wages paid, however this is not the case for all payroll software. You will need to make sure that manual adjustments are made.
Suggested actions
- Review the category and salary band for all individuals aged under 24
- Check the fixed salaries paid to everyone – see example in the table above of working 40 hours a week – as well as hourly paid workers.
- Remember that the age 21-22 age category has been withdrawn and people from age 21 are now to be paid the National Living Wage.
- Be aware also that the apprentice wage category only applies in the first year of the apprenticeship when the apprentice is aged 19 and over, after which the age relevant minimum wage needs to be applied.
- Check whether there could be implications elsewhere such as percentage bonus payments and review pension payments, although this should be picked up by the pensions software.
- Communicate the increase to the relevant team members
- We suggest that a letter is sent to the individuals advising of their salary increase.
- Employment records need to be updated.
- Job vacancies
- Check any positions either under offer or currently advertised to make sure that they are already compliant with the new rates.
- Check the impact on other employees
- It may be worth considering whether other salaries need to be increased such as supervisors as the minimum wage level may now mean that junior team members are paid at a similar level to them.
Legal implications for non-compliance
Payroll compliance including minimum wage reviews are a key focus of HMRC’s enforcement teams. There are severe penalties for non-compliance of minimum wage levels and repayments will be due to affected employees. In February 2024, over 500 businesses were named by HMRC for failing to pay the minimum wage. Those named had to repay what they owed to their staff (which could have been up 6 years) and have also faced financial penalties of up to 200% of their underpayment.
NIC changes taking effect from 6 April 2024
As announced during the Spring Budget 2024, National Insurance will be reduced by further 2% to 8% from 6 April 2024.
This reduction should take effect automatically via your payroll software and you should not need to do anything, but it is always worth checking that the change has been applied.
We have the solution: RPG Payroll Services
Once again, these sweeping changes to the minimum wage demonstrate the need for accurate record keeping and excellent software to manage your business’ payroll compliance. RPG Payroll Services provide a fully managed payroll solution, supported by cloud based technology. you can read here Payroll – RPG Chartered Accountants for more information about RPG’s Payroll Services. Please speak to your usual RPG contact on 0161 608 0000 or contact us by emailing info@rpg.co.uk for more information about how RPG’s Payroll Services could remove the stress from your team.
Please also contact us if you would like details of the RPG Tax Investigation Service in conjunction with Croner-i which pays RPG’s fees in the event of any investigation by HMRC.
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