Ahead of the Autumn Budget, the National Minimum Wage rates from 1 April 2022 have been announced in the media.
They were later confirmed in the 27 October 2021 Budget.
An employee aged 23 or over on the National Living Wage and working a typical 35-hour week will see an increase worth £1,074 a year before tax.
Lower rates apply for younger workers.
The new rates from 1 April 2022 are:
The rates are in line with those recommended by the Low Pay Commission (LPC).
The increases will put pressure on businesses in certain low-pay sectors, on top of their recovering from the impact of the pandemic and dealing with other rising costs and supply chain challenges.
Some businesses will also be facing difficult cash flow conditions following the withdrawal of the furlough scheme and having to service repayments of government-backed COVID-19 loans. Interest rates may also be on the rise in the months ahead, increasing the costs of borrowings.
Businesses also face a rise in National Insurance contributions to fund health and social care from next April and a rise in Corporation Tax from April 2023.
For workers, the rise is not enough to cover the recent withdrawal of the £20-per-week Universal Credit uplift, as well as rising energy, petrol and food bills. In addition, with personal allowances frozen, more people face being dragged further into the tax system from next year.
The National Living Wage is different to the UK Living Wage and the London Living Wage calculated by the Living Wage Foundation.
Differences include that:
Employers who do not pay at least the appropriate minimum wage face penalties as well as being named and shamed by HMRC.
From 6 April 2022, the weekly rate for Statutory Sick Pay will be £99.35 instead of £96.35.
If you would like to know more information about Bishop Fleming Payroll Services by IRIS, please click here.