Increase in the National Living Wage

The National Minimum Wage Act 1998 introduced a statutory right to be paid a certain amount of remuneration for work performed.

HMRC announced that from 1 April 2023 the NMW will see an increase and the effect is presented in the following table:

  NMW Rate Annual increase (£) Annual increase (%)
National Living Wage (23 and over) £10.42 0.92 9.7
21-22 Year Old Rate £10.18 1.00 10.9
18-20 Year Old Rate £7.49 0.66 9.7
16-17 Year Old Rate £5.28 0.47 9.7
Apprentice Rate £5.28 0.47 9.7
Accommodation Offset £9.10 0.40 4.6

In the current context where the costs are permanently increased, we understand that a higher NMW can bring stability for the workers. However, this represents another burden for the employers alongside the energy and raw materials prices.

It is worth mentioning that paying the NMW is not just paying the right amount, sometimes there are underpayments caused by deductions, unpaid working time or incorrect use of the apprenticeship rate and HMRC can issue high penalties in relation to these.

The main points to remember in relation to penalties are:

  • The penalty percentage has been increased from 100% to 200%.
  • The maximum penalty is £20,000 per worker.
  • Where this amount would be less than £100, the minimum penalty of £100 should still be applied.
  • Where this amount would be more than £20,000, the maximum penalty of £20,000 per worker should be applied.
  • The penalty is reduced by 50% if all of the unpaid wages and 50% of the penalty are paid in full within 14 days.

If you need any assistance with this or any other matter, please get in touch.

Written by Alina Popescu

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