North West accountancy firm Mitchell Charlesworth urges employers to prepare for National Living Wage


North West leading accountants Mitchell Charlesworth warns that employers must prepare to for rocketing salary costs from tomorrow when their payrolls increase as the new National Living Wage comes into force.

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Businesses will have to be braced for a 7.5 per cent in salary costs from 1 April, 2016, as UK workers aged over 25 years who are currently earning the minimum rate of £6.70 an hour will receive a 50p increase. The threshold will be increased each year with the aim of reaching 60 per cent of median pay across the UK by 2020, when it could be as high as £9.35 an hour.

 

 

More than one million people will directly benefit from the rise to £7.20 per hour and see their pay packets rise by up to £900 per year. This rise is part of the government’s vision of a higher wage, lower welfare and lower tax society, but critics warn 900,000 jobs could be lost in the retail sector.

However, it is imperative for businesses to pay their workers the correct wage from 1April as HMRC will be responsible for enforcing this new National Living Wage and it can publicly name and shame employers.

Mitchell Charlesworth’s Payroll team of experienced advisors can help businesses through these changes, whether they have an internal payroll team or not. A report by the British Retail Consortium claims the National Living Wage, to be phased in over four years, will add £3bn to annual wage bills alone, while the costs of a new levy to fund apprenticeships will be around £400m a year.

Opinions vary widely on the new National Minimum Wage ranging from it being criticised as a “tax on business” to being hailed as helping to make a more equal society. Either way, this crucial change in workers’ wages will have far reaching effects not just on employee pay packets and employer profits, but also on the wider UK economy.

Ken Davies   

Ken Davies, Mitchell Charlesworth Director of Payroll, said: “To navigate this minefield and ensure businesses do not accidentally fall foul of this critical new legislation, we have a skilled accountancy team who can complete a workforce review to see which employees are eligible for the pay rise.

“We can also support a firm’s own payroll team to take the appropriate action where required to ensure that it complies with the new minimum wage legal framework.

“It is important to inform workers of their new pay rate and we can help produce communications to get this vital message across.

“Mitchell Charlesworth can also check that staff aged under 25 years are earning at least the right rate of National Minimum Wage.”

Workers under 25 should receive rates of pay as follows:

  • £6.70: for 21s and over
  • £5.30: for 18 to 20 year olds
  • £3.87: for under 18s
  • £3.30: for apprenticeships (year 1 or 16-18 year olds in any year of apprenticeship)

National Minimum Wage (NMR) rates will be amended in April each year to coincide with the uprating of the national living wage, starting from April 2017. The NMR rates for workers aged up to 24 and for apprentices will increase from October 2016 in line with the recommendations of the Low Pay Commission.

Anyone wishing to discuss the updating of their payroll or would like to arrange an appointment about outsourcing a payroll can contact Mitchell Charlesworth payroll experts Ken Davies or Joanne Nieman, on tel: 0151 423 7500, or email: enquiries@mitchellcharlesworth.co.uk

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