national living wage

April brought a rise in National Living Wage rates and Workplace (auto-enrolment) pension contributions.

The biggest ever increase to National Living Wage has come into effect.

Meaning that the 1.8 million workers in the UK that are earning the National Living Wage will receive an extra £690 per year.

The increase which came into effect on the 1st April 2019 is the largest since the National Living Wage was first introduced in 2015. 2.1 million workers will benefit from the 4.9% increase which takes them from £7.83 to £8.21 per hour.

This also means that full-time workers now earn £2,750 per year more than in 2015 when the NLW was first introduced.

The majority of these employees are in the retail and hospitality industry who are among the lowest paid in the UK. Rates of pay for younger workers have also increased above the rate of inflation and average earnings.

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

  • Age 21 to 24, the rate has increased from £7.38 to £7.70 per hour.
  • Age 18 to 20 the rate has increased from £5.90 to £6.15 per hour.
  • Under 18, the rate has increased from £4.20 to £4.35 per hour.
  • For apprentices, the rate has increased from £3.70 to £3.90 per hour.

These increases mean that 21 to 24-year olds working full time will earn an additional £580 over the year. 18 to 20-year olds will earn an extra £455 over the year.

Low Pay Commission Chair Bryan Sanderson said:

“We are pleased that millions of workers across the country will see an above-inflation pay rise as a result of today’s minimum wage increases, which follow the recommendations the LPC made in the autumn.

Today is particularly significant as it also marks 20 years of the National Minimum Wage.

Over the last 20 years, the NMW and more recently the NLW have achieved their goal of raising pay without significant negative effects on employment.”

Increases to workplace (auto-enrolment) pension contributions.

Ten million employees will also see changes to the amount of pension contribution which they automatically pay from their wages.

The new rates which took effect on 6th April mean that employees, their employers and the government will all contribute more to pensions.

From 06.04.19 the total minimum contribution will rise to 8%. Employer minimum contribution has increased to 3%, up from 2%. Employee contribution has risen to 5% from 3%.

For a member of staff earning £30,000 per annum this increase will mean an extra £32 contribution to the auto-enrolment workplace pension.

There is the choice to opt-out of the scheme at any time, however, the employee would then lose out on the employer contributions

The benefit this increase in contributions brings to the employee’s pension pot is undeniable, however, it must remain affordable, and some members of staff may need help in managing their finances.

Tax Allowance Threshold Increases.

The basic personal allowance threshold has increased from £11,850 to £12,500 from April 2019.

The personal allowance, which is the amount of income everyone can earn tax-free has increased by £650 per year.

This rate is applicable to all UK workers earning up to £100,000 per year.

The income tax threshold for higher-rate (40%) taxpayers has also increased to £50,000.

Income tax rates for 2019/2020

Earnings                                                 Tax Rate

Up to £12,500                                           0%

Up to £50,000                                          20% (on earnings over £12,500)

Over £50,000 up to £150,000             40% (on earnings over £50,000)

Over £150,000                                          45%

If you are married or in a civil partnership then you may also be entitled to the marriage allowance.

This allows couples to transfer a proportion of their personal allowance between them.

The marriage tax allowance has also recently increased to £1,250, which means the tax saving has gone up from £238 to £250. It does not apply to higher rate taxpayers.

If you need help or assistance with these recent changes to wages, tax and pensions get in touch with our friendly team.

We offer payroll services which can include payslips, wage reconciliation, PAYE and National Insurance Contributions.

We have a wide range of experience and knowledge with a variety of payroll issues and we can deal with your query quickly and efficiently.

Contact us today on 01704 211 434 or