Each year April marks the beginning of the new tax year alongside a number of other changes announced in the Budget from the previous autumn, including changes to the National Living Wage and National Minimum Wage. This year the NLW and NMW will rise once again, meaning that lower paid contractors will receive a higher income.
National Minimum Wage
Those over school leaving age, up to the age of 25 are legally entitled to receive the National Minimum Wage. Therefore, contracts that do not pay Minimum Wage are not legally binding, this includes those workers that are part time, training, casual labourers and many more. The National Minimum Wage changes for April are as follows:
Aged 21 to 24 – Rising from £7.05 to £7.38
Aged 18 to 20 – Rising from £5.60 to £5.90
Under 18 – Rising from £4.05 to £4.20
National Living Wage
The National Living Wage came into force on 1st April 2016 and aims to ensure that 60% of median earnings are reached in the UK by 2020, at which time it is predicted to rise to £9 per hour. NLW applies to workers aged 25 and over, the changes to the Living Wage are as follows:
Aged 25+ – Rising from £7.50 to £7.83
Those exempt to NMW and NLW
There are some exemptions for those receiving NMW or NLW, these include:
- Those self employed and running their own business
- Company directors
- Voluntary workers
- Members of the armed forces
- Those younger than the school leaving age (under 16)
- Those in higher or further education undertaking a work placement
- Those on a government employment programme (e.g. Work Programme)
- And more
The rise in the National Minimum and Living Wage is great news for umbrella contractors working on lower hourly rates as it means that their take home pay will ultimately increase. If you have any questions with regards to your hourly rate, please contact our expert team today.
