National Minimum Wage Update

Significant increase and reporting changes ahead

Payroll Professionals – There are two key updates regarding the National Minimum Wage (NMW) that will impact your processes.

Here’s what you need to know:

  1. Largest National Living Wage increase in over a decade

The Treasury has confirmed a substantial increase in the National Living Wage (NLW). It will also apply to those aged 21 or 22, who currently earn the National Minimum Wage. Effective April 1st, 2024, the NLW hourly rate will rise from £10.42 to £11.44.  This marks the largest increase in NMW/NLW rates in over ten years.

  1. Proposed changes to NMW reporting

HMRC has issued a significant consultation proposal affecting NMW compliance. Currently, employers report employees’ NMW status by indicating which HMRC pre-determined hourly band their regular working hours fall into, through Real Time Information (RTI). The proposed change would require employers to report the total number of actual hours worked (for time workers) and contracted hours (for salaried employees) for each pay period.

Impact on your payroll

This shift to reporting actual and contracted hours will provide HMRC with real-time data for “live” NMW compliance checks.  It is recognised that these checks could easily be automated, providing great risk profiling data for HMRC’s NMW team and future campaigns, potentially leading to increased scrutiny.

The consultation ends on 9 May 2024, and we would welcome the opportunity to discuss your thoughts or concerns you might have in the area of NMW compliance.

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What you can do to manage the National Minimum Wage update

To ensure smooth compliance with the upcoming changes, we recommend:

  • Reviewing your payroll processes to ensure they can accommodate reporting actual and contracted hours.
  • Staying updated on the consultation process and final reporting requirements.
  • Seeking expert guidance to navigate these changes and mitigate potential NMW compliance risks.

Contact PSTAX today

PSTAX’s team of experienced employment tax consultants can help you understand the implications of these updates and ensure your payroll processes are compliant.  Don’t hesitate to contact us to discuss your specific needs and explore how we can assist you.

Together, we can ensure a smooth transition and minimise NMW compliance risks for your organisation.

Book a meeting with a member of the NMW team

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Tim Bridgett

Written by Tim Bridgett

Tim started his career in tax working for ten years with HM Revenue & Customs as an Employer Compliance Officer. He left HMRC to join the profession in 1998 and worked for PwC (then Coopers and Lybrand), covering all aspects of employment taxes, including public sector advisory work with the CIPFA tax service. He then moved to RSM (then Bentley Jennison) in 2006, working with the very successful authoritas public sector team, before finally joining the employment tax team in PSTAX in June 2017.

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