Minimum wage set to rise, but are you well prepared?

George Hay Chartered Accountants

On 1 April 2018, the National Minimum Wage (NMW) and the National Living Wage (NLW) will increase for all age groups.

Following recommendations from the Low Pay Commission (LPC), the Chancellor Philip Hammond announced in the Autumn Budget that statutory wage rates would once again increase this year, with the intention of improving the prospects of younger workers.

For those currently receiving the NLW, i.e. anyone over the age of 25, they will see their hourly rate rise from £7.50 to £7.83 an hour, representing an increase of 4.4%. This means that some full-time workers could be up to £600 a year better off.

The National Living Wage was first introduced in 2016 as a compulsory minimum rate which, by law, must be paid to employees aged 25 or over.

Despite the rate being reconsidered each April, even the latest increase still falls short of the Living Wage Foundations recommendation for a ‘real’ Living Wage of £8.75 per hour for the whole of the UK, except for London workers for whom they recommend £10.20 per hour.

As for the NMW, most workers in the UK, over compulsory school leaving age, are legally entitled to be paid at least the NMW and all employers must pay it to those entitled to it. The upcoming increases are as follows:

Age Current rate Rate effective 1 April 2018
21-24 £7.05 £7.38
18-20 £5.60 £5.90
Under 18 £4.05 £4.20
Apprentices £3.50 £3.70


The new rates will boost the earnings of between 260,000 and 360,000 young workers directly but, on the flip side, will leave businesses facing a larger payroll bill.

Further pledges to increase the NMW and NLW are expected in future, with the Government indicating that it still hopes to meet its pledge of raising the NLW to nearly £9 by 2020.

Most of these rate rises beat the current rate of inflation of around 3%, meaning that businesses may struggle to cover some of the resulting costs.

Failure to pay the correct statutory wage could result in severe financial penalties, including the possibility of a business being publicly named and shamed.

Our dedicated team of experts have the experience and knowledge to assist you with any payroll-related query that you might have, giving you peace of mind when it comes to fulfilling your responsibilities as an employer and complying with the latest legislation.

If you’re concerned about the increases and the impact they may have on your business or, more specifically, your wage bill, why not contact us today on 01767 315010 or email

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