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Changes to Minimum Wage


Date posted: 2021-03-25

At the beginning of March, Chancellor Rishi Sunak announced the 2021 budget. It mostly covered the COVID-19 recovery measures which have been extended as the pandemic continues. Another important point to note is the changes to minimum wage.

These changes were actually announced back in November 2020. But with everything going on, you can be forgiven for letting this slip your mind! The increases come into effect on 1 April – so it’s time to give your payroll team a little nudge if you haven’t already!

An Increase in Minimum Wage

The Low Pay Commission carried out their usual research in August 2020. Given the catastrophic effects of the pandemic on GDP, their findings were fairly positive. They concluded that the Coronavirus Job Retention Scheme (furlough) had been successful in protecting employees from redundancy.

Unfortunately, many of the people affected by the current lockdown are young people in low-paid jobs. This demographic often work in hospitality or non-essential retail.

The new changes to the National Living Wage will apply to workers aged 23 and over. Previously, only over-25s were subject to the NLW, with a separate rate for those between 21 and 25.

Here’s a breakdown of the rates that come into effect on 1 April 2021:

Date 23 & over 21 to 22 18 to 20 Under 18 Apprentice
From 1 April 2021 £8.91 £8.36 £6.56 £4.62 £4.30
Date 25 & over 21 to 24 18 to 20 Under 18 Apprentice
1 April 2020 (current rates) £8.72 £8.20 £6.45 £4.55 £4.15


Additional Student Loan Band

Another key point to note ahead of the new financial year is a new Student Loan band. This applies to people who lived in Scotland and applied to university through the Students Award Agency Scotland (SAAS) when they started their course. The new student loan plan 4 works in the same way as existing student loans plans. All. student loan plans are applied as a percentage of earnings (subject to Class 1 National Insurance), once your earnings reach a certain threshold.

If you have any questions or queries relating to payroll, please get in touch with our team. We can advise you on current legislation and your responsibilities as an employer. 

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