The new tax year is fast approaching, and there are significant changes to the National Minimum Wage and National Living Wage which come into force on 1st April 2024. Here at Payroll Junction we have you covered with a summary of all the important information you need to know!
National Living Wage
Having previously only applied to those over 23, the age criteria has been lowered to 21 years of age. For some employers this will represent a significant jump in their wage bill, depending on how many people in this age bracket they employ.
From 1st April the National Living Wage for those 21 years and over will be £11.44 per hour.
National Minimum Wage
From 1st April the National Minimum Wage will be £8.60 per hour for 18-20 year olds, and £6.40 for under 18s. Employees must be of school leaving age to qualify for the National Minimum Wage.
The apprentice rate is £6.40 for those aged under 19, or for over-19s in the first year of their apprenticeship. From the second year of their apprenticeship all apprentices are entitled to the minimum wage for their age. If you have apprentices aged 21 and over, provided they have completed the first year of their apprenticeship, you will need to pay them the National Living Wage (£11.44 per hour).
When are these increases paid?
The new rates only need to be applied from the next pay reference period after the increase. Therefore employees may not see the increased rate immediately from 1st April. For example, your pay period may be 16th March – 15th April – in this instance the employee might think they are entitled to receive the new rate for the second half of their pay (1st-15th April), however this is not the case as the new rate only needs to be applied to the next pay reference period onward, which would be 15th April-15th May. If the pay reference period starts on the 1st of a month (i.e. calendar monthly), the rate will be implemented in their April payslip for the full month as all hours worked in that pay reference period fall in line with the start date of the new change.
This system also applies when the employee has a birthday and changes pay brackets. This only needs to be applied at the net pay reference period, not the current one. However, in both instances the employer has the discretion to bring the new rate forward and pay it earlier if they wish.
What about National Insurance?
There has already been a change in National Insurance rates which came into force on 6th January 2024, lowering the main rate of employee class 1 national insurance contributions to just 10%. You will need to make sure that this rate change is reflected in your payroll immediately.
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