A Guide to National Living Wage
Posted 20 Mar 16
If you are a business owner hiring staff, from 1st of April you will be subjected to the new National Minimum Wage regulations.
In this article we present you with a guide, which will help you understand better the idea behind the National Living Wage and what, as an employer you will need to do in order to comply with the new legislation.
What is the National Living Wage and What Changes Will be Introduced from the 1st of April?
The National Living Wage is the amount an employee needs to earn in order to cover the basic costs of their living. The new National Living Wage is a way in which the government helps reshape the society from a low wage, high tax and high welfare to a higher wage, lower tax and lower welfare one.
From 1st of April the national living wage will become a legal requirement for everyone employing staff. The new legislation will increase the hourly rate for workers over the age of 25 (but not the ones in their first year of an apprenticeship) by £0.50 to £7.20 per hour.
The old National Minimum Wages rates will still be applicable to those under the age of 25. They are as follows:
Standard Adult Rate (for employees age 21-24) £6.70/hour
Development Rate (for workers aged 18-20) £5.30/hour
Young Workers Rate (for workers aged 16-17) £3.87/hour
Apprenticeship rate £3.30/hour
As an employer, you will be legally required to pay qualifying employees the National Living Wage as of 1st April.
How can I prepare my business for the upcoming changes?
The first step you need to take in order to prepare your business for the upcoming changes is discussing a new financial strategy with your accountant. It is possible that the increase in rates you will be obligated to pay your employees might influence your company’s cashflow in a negative way. However, there are ways in which you can prevent it from happening. Organising your team better, changing the rates and increasing the quality of your products or services or targeting new market are just some of the steps you can take. Furthermore, it is important that you understand what expenses you can deduce from tax, since a lot of business owners, even the most experienced ones tend to lose a lot of money due to lack of knowledge of this areas.
At Tawanda Accountants we make sure our clients’ businesses are never influenced negatively by the changes and introductions of new legislations. We will help you create the best strategy for your business, which will allow you to develop it in the direction you wish no matter what economic climate the market is in. We will make sure you understand all the aspects of business and accounting law which apply to your company. Contact us today to find out how we can help you better your business and what new legislation apply to your current situation.