Changes to Minimum Wage Announced for 2021

Minimum Wages

The minimum wage is in place to protect workers from being underpaid. The precise terms of it are reviewed annually. There are two types of the minimum wage, National Living Wage and National Minimum Wage.

National Living Wage and National Minimum Wage

Before this coming tax year, the minimum wage applies to workers under 25, and living wage to those over 25.

It has been considered a hot topic for a while, that those under 25 are only eligible for minimum wage, given that many of them do not live with their families and have the same costs as someone over 25.

From the 1st of April, workers aged 23 and above will now be eligible for the National Living Wage, set at £8.91 per hour. This is quite the increase since 2019, when they were only eligible for £7.70 an hour.

The minimum wage now applies to workers aged 16 and above. The different bands come with different entitlements. Those aged 16 and 17 are entitled to £4.62 per hour, those aged 18-20 get £6.56 per hour and those aged 21-22 are on £8.36.

The minimum wage can only be reduced if you are providing your employees with accommodation. The total sum payable can be calculated by subtracting the “accommodation offset” from the appropriate minimum wage for their age.

Each day, for these purposes, runs from midnight to midnight. The accommodation offset for 2021 is £8.36 per day, or £58.52 per week.

Pay Correctly!

You need to make sure you are adjusting your rates, if relevant, to fit in line with the new legislation. You should also have the correct processes in place to update a young worker’s pay when they move into a new age bracket. Paying people below the minimum wage for their age is a criminal offence.

You can get an accountant to sort it out for you, and make sure all your payslips are updated and correct. These rates apply whether you employ people on a freelance basis or not. If you’re looking for an accountant based in Milton Keynes, give us a call on 01908 904794.