April 5th, 2017

New National Minimum Wage rates from 1 April 2017

Important news for employers and workers this week as the new National Minimum Wage rates came into force on 1 April.  The new hourly rates are as follows:

Category of workerHourly rate
Aged 25 and above£7.50
Aged 21 to 24 inclusive£7.05
Aged 18 to 20 inclusive£5.60
Aged under 18, but above compulsory school leaving age£4.05
Apprentices aged under 19£3.50
Apprentices aged 19 and over, but in first year of apprenticeship£3.50


Previously, minimum wage rates were effective from 1 October but from now on they will be effective from 1 April each year.  A sensible move from the government as this date ties in neatly with the tax year.

Failure to pay minimum wage can lead to stinging penalties of up to £20,000, naming and shaming in the press and even criminal prosecution in the worst cases so it is important that you are aware of your workers’ pay rates.

Common mistakes

Mistakes are easily made when it comes to minimum wage so detailed below are some of the problem areas to be aware of.

Keeping track of milestones

As you can see from the table above, there are several milestones in applying minimum wage rate rises for younger employees.  Birthdays, first year anniversaries for apprenticeships and 1 April should all be tracked using diary software.  Outlook is as good as any and simple to use

Paying low fixed salaries

The rate of pay of hourly paid staff is easy to compare to the published minimum wage rates but employees on low fixed salaries or salaried part time employees are more difficult to compare.  For example, the minimum salary to be paid to a 25 year old employee working a 37.5 hour week is now £14,625.  Whenever I mention this figure to clients they are always surprised at how high it is.

Salary sacrifice arrangements

Salary sacrifice arrangements allow employees to exchange paid salary for some other benefit such as pension contributions, childcare vouchers or the cycle to work scheme.  Such arrangements cannot be implemented to the extent that the post-sacrificed salary is below minimum wage.  This means that salary sacrifice is not available to those paid the minimum wage.  These employees are easy to identify; the difficulty is identifying the workers who are paid just above minimum wage and then assessing the maximum salary that they can sacrifice.

In short, minimum wage can be a complex area but it is essential you stay compliant to avoid tough penalties and adverse publicity.  If you are unsure of your obligations, please do get in touch to see how we can help.

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Limited Companies Payroll Penalties Pensions


John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.

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