The new minimum wage (NMW), which will apply for workers under the age of 25 years, as well as apprentices, comes into force next month. The NMW applies to all workers and is paid at different rates according to age.
From 1 October, the government will be increasing the NMW rates as follows:
- Workers aged 21 to 24 over: £6.95 (£6.70)
- Workers aged 18 to 20: £5.55 (£5.30)
- Young workers aged under 19 but above compulsory school age who are not apprentices: £4.00 (£3.87)
- Apprenticeship rate: £3.40 (£3.30)
Increased penalties will apply to employers who do not comply with the new rates, yet there are many instances where businesses can find themselves in hot water with HMRC due to unintentional non-compliance. For example, this could be as a result of administrative failings where an employer's systems didn't identify when a worker moved from one rate to another.
The increase in the NMW will also increase other costs such as pension contributions and national insurance contributions so businesses must factor these into budgets for the coming year.
Since the introduction of the NMW in 1999, businesses have had to cope with Real Time Information and the significant changes required by Auto Enrolment. Now employers must budget and plan the necessary alterations to their systems to take account of the new rates from 1 October.
At Beavis Morgan we have a specialist team who can take these tasks away from you and provide a speedy and cost effective payroll solution for your business. If you would like to know more please contact Margaret Lee-Barber or your usual Beavis Morgan Partner.