On 8th July George Osborne announced the following:
- Introduction of a new National Living Wage for workers aged 25 and above, and asks the Low Pay Commission to set out how it will reach 60% of median earnings by 2020; based on Office of Budgetary Responsibility (OBR) forecasts, this means that the National Living Wage will reach the government’s target of over £9 by 2020.
But what does this mean to businesses?
- From April 2016 employees over the age of 25 are to be paid at a rate of £7.20ph
- The National Living Wage is perceived as being a premium on top of the National Minimum Wage
- The National Minimum Wage is still in place for those under 25 (see table)
- The current National Minimum Wage is still due to increase to £6.70ph from October 2015
There is some support to businesses to help pay for part of this additional cost.
- The employment allowance, currently set at £2,000 will be increased to £3,000, this increase will pay for the cost of the employers NI when employing 4 full time individuals paid at NLW.
- Corporation Tax is being cut to 18% from 20%
National Minimum Wage / National Living Wage rates
[table id=MinWage /]