The national minimum wage (NMW) and national living wage (NLW) rates are due to rise significantly for pay periods starting on and after 1 April 2023. See below for the new rates.
- Workers aged 23 and above – hourly rate from 1 April 2023 – £10.42 (currently £9.50)
- Workers aged 21 to 22 – hourly rate from 1 April 2023 – £10.18 (currently £9.18)
- Workers aged 18 to 20 – hourly rate from 1 April 2023 – £7.49 (currently £6.83)
- Workers aged under 18 – hourly rate from 1 April 2023 – £5.28 (currently £4.81)
- Apprentices – hourly rate from 1 April 2023 – £5.28 (currently £4.81)
These increases – the largest since the NMW began – are being introduced because inflation is running at around 10%.
Employers should be careful not to make deductions which reduce workers’ wages below the relevant NMW rate. For example, withholding money through the payroll for employee uniforms; staff meals; or subsidised childcare could break the NMW rules.
If you run a salary sacrifice scheme for childcare, check that the amounts paid after the salary reduction still meet the NMW rate for the employees in the scheme. It may be necessary to redesign the childcare scheme so that it is run outside of the payroll.
Where you provide accommodation for your workers you can charge rent, and this deduction is permitted under the NMW rules but only if it does not exceed £8.70 per day. This permitted accommodation off-set will rise to £9.10 per day from 1 April 2023.
Where the NMW rules are broken, HMRC can impose penalties of up to 200% of the amount of NMW underpaid up to £20,000 per worker.
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