National Minimum Wage Increases from April 2020

Minimum Wage

The National Minimum Wage will rise in April 2020 to £8.72 per hour for those aged 25 and over. Lower rates are applicable for those aged under 25.

The April 2020 Minimum Wage increases in full

The following rate increases are to be applied from April 2020:

  • Aged 25 and over will be entitled to £8.72 per hour (previously £8.21)
  • 21 to 24 year olds will be entitled to £8.20 per hour (previously £7.70)
  • 18 to 20 year olds will be entitled to £6.45 per hour (previously £6.15)
  • 16 and 17 year olds will be entitled to £4.55 per hour (previously £4.35)
  • Apprenticeship rate increases to £4.15 per hour (previously £3.90)

The Apprentice rate is applicable for those on an apprenticeship aged under 19 years of age or if they are in their 1st year of the apprenticeship.

From what date do the above increases apply?

The National Minimum Wage increases stated above apply from 1st April 2020.

Who will benefit from the increase in the National Minimum Wage?

The government has estimated that almost 3 million UK workers will benefit from these increases to the National Minimum Wage.

A full time employee aged 25 or over working 35 hours per week is expected to see a pay rise of up to £930 per annum.

Does everyone receive the National Minimum Wage?

No. Not everyone is entitled to receive the National Minimum Wage.

The main exemptions are Company Directors, Self-Employed, Volunteers and students on work placements.

TAX TIP: We strongly recommend that if you are a Company Director that the Optimum Directors Salary rate is declared.

What is the National Living Wage?

You may have heard of the National Living Wage and wonder how this differs to the National Minimum Wage.

The terms are often used interchangeably however the correct definitions are as follows:

  • The National Living Wage is only applicable to those aged 25 and over. It relates to the rate of £8.72 per hour.
  • The National Minimum Wage is the minimum amount payable to all of the other workers. Therefore the rates for those aged 24 and under are all National Minimum Wage rates.

What to do next?

The hourly rate increases are clearly defined by age boundaries. It is therefore important to ensure that the correct dates of birth for all employees are known.

Any employee aged 17, 20 and 24 should have their birthdays noted as they will change to a different pay group. For example a 24 year old will be entitled to £8.20 on the 1st April 2020. However on their 25th birthday this will increase to the £8.72 per hour rate.

Most commercial software will inform the user if an employee is paid less than the minimum rates. However we do recommend that a manual check is also carried out.

Employees are much more aware of their rights and therefore should an error occur this could prove costly, in both penalties and company reputation.

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

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