Businesses are being urged to prepare for the double-whammy of the National Minimum Wage and the National Living Wage rises, which will bring a double-whammy of extra costs to bear on hard-pressed firms from 1 April 2022.
Chancellor Rishi Sunak confirmed the National Minimum Wage and National Living Wage rise in the Autumn 2021, with the National Living Wage set to increase to £9.50 per hour. The rise will see those working 37.5 hours a week increase their annual income by £1,150.50 a year – landing employers with potentially hefty new payroll duties.
Leading Wales-based accountancy practice, Bevan Buckland LLP, warns businesses across the region to plan and prepare for the potential impact.
Tina Davies, Payroll Manager at Bevan Buckland LLP, said: “The current rates of National Living Wage mean the hourly rate paid to those aged over 23 years of age is £9.50. The rise will see those working 37.5 hours a week increase their annual income by £1,150.50 a year. It is not just workers in this age group that will benefit from the increase however. Workers aged between 21 and 22 earning the National Minimum Wage will see their hourly pay rise by 0.82p an hour to £9.18 as per the changes,”
Harri Lloyd Davies, Partner at Bevan Buckland LLP added: “Many businesses will be preparing budgets for the next 12 months and it is vital that they take the increases in the National Living Wage into account. The change will not only impact workers on the living wage but also those just above leading to a significant cost increase for employers. This will often mean a need to increase prices or make cost savings elsewhere and this needs to be factored in as part of the budgeting process.”
Workers aged under 20 and apprentices will see their minimum rate of a pay rise. The new tax year will result in a 51p per hour increase for apprentices, a 19p increase for those aged under 18 and a 27p increase for workers aged between 18 and 20. These increases will exceed the current rate of inflation to boost earnings for the country’s lowest-paid workers. The National Minimum Wage and National Living Wage rise will however affect companies providing higher wages to more senior employees more negatively.
“All workers are entitled to the National Minimum Wage and National Living Wage respectively. Employers who fail to pay the correct wage will be subjected to a penalty fine and may be named by the Government. All businesses must therefore prepare for this change. It’s the employer’s responsibility to keep records proving that they are paying the minimum wage. Most employers use their payroll records as proof. All records must also be kept for 3 years,” concluded Tina.
Bevan Buckland LLP is the largest independent accountancy practice in Wales providing practical support and strategic accounting and tax advice for small to medium-sized businesses. Headquartered in Swansea, the firm has offices in Cowbridge, Carmarthen, Pembroke, Haverfordwest and St David’s.
For further information on the National Minimum Wage and National Living Wage, please contact Bevan Buckland LLP on 01792 410100. Alternatively, please email mail@bevanbuckland.co.uk