Updates on National Living and Minimum Wage – Autumn Statement 2023

From 1 April 2024 the hourly rate for National Living Wage (NLW) will increase from £10.42 to £11.44. This is an increase of over 9%.  

For an employee working 37.5 hours a week this will give rise to an additional wage cost for an employer of £1,990 per annum. With the associated costs of Employer’s National Insurance and pension contributions, this could see an additional cost to business of £2,325 per employee per annum.  

Those sectors that often pay employees on an hourly basis such as manufacturing, retail, care and hospitality will see a significant impact on their employee costs.  All employers will need to be mindful, however, as many salaried employees could be close to the threshold.  

From April 2024, the minimum salary for a 21-year-old working 37.5 hours per week would be £22,308.  

Employers need to be careful where they offer salary sacrifice schemes, as although the salary offered could comply with the new thresholds, employees must not be allowed to sacrifice their pay to below the National Minimum Wage (NMW).   

Currently the NLW wage is only applicable for those 23 years old and over.  NMW is then tapered for those aged 21 to 22, 18-20, under 18 and apprentices.  From April 2024 the NLW will apply to those aged 21 and over and the NMW will taper for those aged 18-20, under 18 and apprentices.   

Those who are aged 21 – 23 will see increases of over 12% and apprentices seeing increases of over 21%.  

What impact is this going to have on the profitability of your business? 

Our Autumn Statement 2023 question time webinar is now available to watch on-demand. During the webinar, our panel of tax and business experts came together to examine the changes unveiled by the Chancellor, and to answer your questions. Click here to watch the webinar.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.