Changes in National Living Wage, What You Need to Know


First introduced in 1999, the National Minimum Wage is the minimum pay per hour almost all workers are entitled to. The National Living Wage, is slightly higher than the national minimum wage and is for workers aged 23 and over (who are not in their first year of an apprenticeship), this was first introduced in 2006.


As of 1 April2023, the new National Living Wage rate stands at £10.42 per hour.


Your Duties as An Employer

The National Minimum Wage is a legal requirement that sets the minimum hourly rate that you are required to pay your employees by law. The minimum hourly wage a worker should get depends on their age and whether they’re an apprentice.

As an employer, it’s important you understand your duties and responsibilities under minimum and living wage legislation to ensure you are paying your staff correctly to avoid financial penalties and even prosecution. No matter how small your business may be, you still have to pay the correct minimum wage.

If you’re a growing business and are fairly new to how payroll operates for staff, you might want to check out our handy ‘Payroll Compliance Checklist’  which contains everything you need to consider when setting up staff on payroll, from expenses to workplace pensions.

Below we’ve summarised the changes to the National Minimum Wage and the National Living Wage so you can better understand the rates you will need to pay staff.


Rates As of 1st April 2023

The National Living Wage covers all workers aged 23 and over who are not in the first year of an apprenticeship

The National Minimum Wage applies to those workers aged below 23 years and who are not in the first year of an apprenticeship

New Rates from April 1st 2023

Age Category                          New Rate of Pay                   
Apprentice £5.28 per hour*
16 to 17 years old £5.28 per hour
18 to 20 years old £7.49 per hour
21 to 22 years old £10.18 per hour
23 years old and above £10.42 per hour

* This rate is for apprentices aged 16 to 18 and those aged 19 years of age or over who are in their first year of apprenticeships. All other apprentices are entitled to the National Minimum Wage for their age.

The rates change on 1 April every year, so you might want to set a calendar reminder to review these in advance of this date annually.


Additional Considerations for Employers

The National Minimum Wage is worked out at an hourly rate, but it applies to all eligible workers even if they’re not paid by the hour.

This means that, however someone gets paid, they still need to work out their equivalent hourly rate to see if they’re getting the minimum wage. It’s important to be clear on what does and doesn’t count as working time.

If you’re a sole trader and are assessing how you will afford to pay new starters before deciding to whether to hire people on a permanent, part time or fixed term contract basis, looking at minimum wage requirements is a great start. There are 7 key things you need to do when you're a sole trader employing staff, which you may want to review alongside wage requirements.

If you already have staff, now may be the right time to look at further ways you can support your employees, especially in light of the cost of living crisis affecting working individuals and families across the UK. Setting up a Salary Sacrifice Scheme for your employees may be worth considering.

What is a Salary Sacrifice Scheme? Under a salary-sacrifice scheme, employees agree to forego part of their salary in return for non-cash benefits such as pension contributions, which can enable tax and national insurance savings to be made.


What is the London Living Wage?

The London Living Wage is an hourly rate of pay, currently set at £11.95.It is calculated independently to reflect the high cost of living in the capital, giving a worker in London and their family enough to afford the essentials and to save.

However, as this wage is higher than what you are required to pay as a business owner, you must decide to choose to pay your employees the London Living Wage.

It does makegood business sense to pay your staff over and above both the National and London Living Wages if at all possible as there are some business benefits to such a decision.

These benefits include;

·      A reduction in absenteeism and sick leave

·      You will find it easier to recruit and retain staff

·      You will see a huge boost to staff morale and productivity

·      Plus, it can put your business brand in a positive light as an employer.


Looking for Some Support?

If you need help managing payroll for your staff, the team of expert accountants at Blue Rocket Accounting can help.

We have packages to fit all budgets, there are no businesses too large or too small for our team to handle. Give us a call today to discuss your needs and get the expert advice and support you gain from having Blue Rocket supporting your business growth.

Call today on 01322 555442 to discuss your needs.


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