Increases to the National Living Wage and National Minimum Wage rates from April 2022
Updated: Mar 31
Are you aware of the increases announced in the Autumn Budget for the rates of the National Living Wage (NLW) and National Minimum Wage (NMW)?
From the start of April 2022:
The National Living Wage will increase from £8.91 per hour to £9.50 per hour (for those aged 23 and over)
The National Minimum Wage for those aged 21 to 22 will increase from £8.36 per hour to £9.18 per hour
The National Minimum Wage for those aged 18 to 20 will increase from £6.56 per hour to £6.83 per hour
The National Minimum Wage for those aged 16 to 17 will increase from £4.62 per hour to £4.81 per hour
The National Minimum Wage apprentice rate for those aged under 19 or in their first year of an apprenticeship will go up from £4.30 per hour to £4.81 per hour, bringing it into line with the rate for those aged 16 to 17.
The consequences of underpayment
If HMRC identifies an underpayment, they may issue an underpayment notice, meaning the employer must pay the arrears to the affected workers and a financial penalty to the Secretary of State.
The penalty will be 200% of the total underpayment, with a minimum of £100 and a maximum of £20,000. Employers should note that the maximum applies to each worker who has been underpaid, not the total for all affected workers, so depending on the number of workers, the total penalty could be significant indeed. The penalty is reduced by 50% if all of the unpaid wages and 50% of the penalty are paid in full within 14 days.
Where non-compliance includes instances of falsifying records or refusing to answer a compliance officer’s questions, this may result in criminal prosecution by HMRC, with a potential penalty of an unlimited fine.
If an employee brings a claim for unlawful deductions from wages or breach of contract arising from underpayment of the NMW, HMRC cannot enforce a complaint on their behalf.
As can be seen, the penalties for not paying the NMW/NLW can be very significant, so it is a good idea to make sure you have checked all your employees’ pay rates.
A talk with one of rradar’s tax team could ensure you are fully compliant with the new rates and avoid the attention of HMRC.