As announced in last year’s Autumn Budget, the National Living Wage and National Minimum Wage (for under 25s) will be increasing in April. As a quick reminder, here are the details of the forthcoming increases:
- National Living Wage (age 25+) – Rising from £7.50 to £7.83 per hour
- National Minimum Wage (21-24) – Rising from £7.05 to £7.38 per hour
Due to this increase, the minimum rate that Exchequer Solutions charges will also rise from April. We are asked regularly how our minimum rate is calculated, and how this rate compares to other umbrella companies, take a look below as we explain our calculations.
How do we calculate our minimum rate?
Each and every contractor using Exchequer’s services, no matter their hourly rate, will benefit from a professional service with compliance and customer service at the forefront.
Within our service we will:
- Ensure that contractors receive at least the National Living/ Minimum Wage at all times
- Pay contractors holiday pay
- Pay ERNI to HMRC
- Administer and pay the Apprenticeship Levy
We ensure that a contractor’s take home pay is as high as possible, regardless of whether they are on a lower or higher rate. We do this by simply reducing the margin that we retain for contractors on those lower rates, making our margin lower than the majority of other umbrella companies.
In fact, ours is so low that an umbrella company that claims their margins are lower than ours are potentially not operating in compliance with minimum wage regulations. This is due to the fact that the base cost of employing a worker in the UK is NMW plus holiday pay and ERNI, this amounts to either £8.86 or £9.43 depending on the age of the individual; therefore if an Umbrella company is receiving less than this from an agency they cannot be accounting for all of the above statutory payments.
Details of our minimum rates are as follows:
Aged 25 and over (based on 40 hours a week)
National Living Wage: £7.83/ hour
Holiday pay: £0.95/ hour
Employer’s National Insurance: £0.65/ hour
Total cost: £9.43/ hour
Exchequer’s minimum rate: £9.74/ hour
Our minimum rate allows us to administer the above and retain a small margin.
Aged under 25 (based on 40 hours a week)
National Minimum Wage: £7.38/ hour
Holiday Pay: £0.89/ hour
Employer’s National Insurance: £0.59/ hour
Total cost: £8.86
Exchequer’s minimum rate: £9.15/ hour
Our minimum rate allows us to administer the above and retain a small margin.
If you have any further questions about our minimum rate or would like to discuss Exchequer’s umbrella service, please get in touch with the team today.
