As recent increase in National Minimum Wage rates are coming into effect soon, there are a flurry of questions to be answered by chartered accountants Stockport, IN Accountancy. The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. NMW rates increases come into effect on 1 October 2016.
- the rate for 21 to 24 year olds will increase by 25 pence to £6.95 per hour
- the rate for 18 to 20 year olds will increase by 25 pence to £5.55 per hour
- the rate for 16 to 17 year olds will increase by 13 pence to £4.00 per hour
- the apprentice rate will increase by 10 pence to £3.40 per hour.
The mandatory National Living Wage (NLW) applies for workers aged 25 and above. This is £7.20 an hour.
NLW and NMW rates will in the future be uprated every April starting in April 2017.
Employers that are non-compliant may be ‘named and shamed’ by the HMRC. Penalties may be levied on employers where HMRC believe underpayments have occurred.
National Living Wage hits small business costs
According to research, 47% of small business owners blame increased wages following the introduction of the NLW as the main contributor to rising costs.
The research, carried out by the Federation of Small Businesses (FSB), revealed that a third of FSB members claim that the NLW has led to a small increase in their wage costs while one in five have said that their staff costs have increased significantly. Although 59% of FSB members absorbed the increased costs through reduced profitability, 35% have increased prices, 24% reduced staff hours and 23% cut investment.
HMRC have updated their guidance on payroll reporting including what employers should include on the Full Payment Submission (FPS) and Employer Payment Summary (EPS) returns.
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