During last month’s Spring Statement, the Chancellor confirmed that the National Minimum Wage, National Living Wage and Employment Allowance would all be increased from 1st April to help with rising living and employment costs.
The National Living Wage has been increased by 6.6% – its highest ever rise. It’s said that these wage increases will benefit roughly 2.5 million individuals, especially those in the retail, hospitality and cleaning industries. So let’s take a look at the new rates of pay.
National Minimum Wage & National Living Wage
As of 1st April 2022, the new rates of pay are as follows:
|Wage type||New minimum rate|
|Age 23+ (National Living Wage)||£9.50|
Commenting on these increases, Chancellor Rishi Sunak stated: “This historic increase will mean a pay rise for millions of hard-working Brits – with an average full-time worker pocketing an extra £1,000 a year.”
The government is encouraging individuals to check that their wages now meet these new minimum rates. You can find out more about this and the wage increases by visiting the government website.
Increased Employment Allowance
There’s some good news for employers too! Just under 500,000 businesses are said to be benefitting from the Chancellor’s decision to increase the Employment Allowance to £5,000 (effectively a tax cut of as much as £1,000). This also means 50,000 small businesses that were previously required to pay employer National Insurance Contributions (and the new Health and Social Care Levy) will no longer be required to – taking the total up to 670,000.
Martin McTague, the Federation of Small Businesses’ National Chair, praised the Chancellor on this increase:
“The increase in the Employment Allowance helps small firms do what they do best, creating and sustaining jobs.
“This was FSB’s ‘hero ask’ at the Spring Statement, and we have hugely valued the time taken by Treasury officials to work with us on the positive impact this will have not just on work opportunities, but also training and investment. The Chancellor has now raised the Allowance twice since his appointment, stepping up for small businesses.”
If you’d like more information on the above changes, or to seek advice on how the Employment Allowance and minimum wage increases affect your business, get in touch with our team of friendly accountants. You’ll find all of our contact information here or why not sign up for a free consultation?