The minimum wage which an employee or a worker gets depends on the age of an individual as well as if they are a trainee. The National Minimum wage is the minimum pay per hour which each worker is entitled to get. The National living wage, which was introduced on 1 April 2016, is more than the National minimum wage which workers get if they are over 25 years of age. Irrespective of the business size, employers are liable to pay their employees the minimum wage. To be eligible for the National minimum wage, workers must be at least school graduating age. Employees or workers are also eligible to the minimum wage if they are:
Apprentices are eligible for the minimum wage, at the apprentice rate, if they are either:
Employees or workers of the following types are not entitled for the National Living Wage or National Minimum Wage:
In addition to the above mentioned points, individuals are classified as doing voluntary work if they get certain benefits such as meal expenses or reasonable travel and are working for a charity or a voluntary organization / fund-raising institution.
From 1 April 2016, a new mandatory National Living Wage (NLW) was introduced by the government for workers whose age is 25 and above. The NLW is initially set at £7.20 which is a rise of 50p in comparison to the current National Minimum Wage (NMW) rate. The adult NMW rate at present is £6.70. The National Living wage was introduced through an amendment to the National Minimum Wage regulation of 2015. This amendment was made to make sure that the rules that apply to the National Minimum wage rates for workers below 25 years also applies to workers eligible for the National Living Wage.
The government in the United Kingdom desires a shift from the low wage – high tax – high welfare society to a high wage – low tax – low welfare society. The government has a strong believe that it is the right time to take corrective measures to make sure that low wage workers can take a greater share. The National Living Wage is an essential step towards this development.
Starting 1 April 2016, the National Living rate will be applicable to any pay allocated on a monthly reference period. An employer will be required to check the rate that was applicable at the beginning of the pay reference period in case the pay reference period starts or ends at either side of 1 April 2016. For instance, if the pay reference period begins from 19 April, the pay from 1 April 2016 to 18 April 2016 will be calculated based on the National Minimum Wage rate and based on the National Living Wage rate from 19 April 2016.
The National Living wage and the National Minimum Wage is the minimum rate of pay per hour that pretty much every employee is entitled to under UK law. It’s determined by age and whether an individual is an apprentice or not.
These below mentioned rate come into effect from 1 October 2015 and are applicable for the pay reference period beginning on or after that dat. The rates applicable from 1 October 2015 are:
Starting October 2016 the new rates will be:
The act of forging the payment records of paying workers less than the National Minimum Wage is against the Law. The worker should talk to the employer if he/she is not paid according to the correct rate and try to resolve the matter informally. If the matter is not resolve amicably, the worker can make a formal objection to the employer. In the worst case scenario, a worker can make complaint to HM Revenue & Customs and if the HMRC finds out that the employer is defaulting, HMRC can send a notice of amount outstanding along with the penalty for not paying the accurate rate of pay to the worker.
With the introduction of the National Living Wage the penalty for failure to pay will be 200% of the amount payable, unless the amount outstanding is paid within 14 days. The utmost fine for failure to pay will be £20,000 per worker. On the other hand, employers who fail to pay will be expelled from being a company director for upto 15 years.
For the accounting period that is in default, surcharge is a percentage of the VAT amount outstanding on the due date. If the business defaults again in a surcharge period, the surcharge rate increases with every default. There is no charge for the first default and the business pays for the subsequent defaults as follows:
|Salary / Gross Pay||£68,400||£5,700||£1,315|
|Tax Free Allowance||£11,000||£917||£212|
|Income Tax Paid||£16,560||£1,380||£318|
|Total PAYE Deductions||£21,261||£1,772||£409|
|Net Wage / Take Home Pay||£47,139||£3,928||£907|
DNS Accountants is a skilled taxation and accounts management firm that offers complete range of wage computation services to individuals across the United Kingdom. DNS has a strong track record of supporting individuals to manage and plan their savings. DNS helps individuals manage their tax home wage and file tax returns. DNS is a well-known firm of CA’s or ACA’s with operations in various counties and cities of the United Kingdom. The firm’s learned team focuses on helping people with their wage calculation and other services such as bookkeeping, accounts management, self-assessment, business start-up, payroll-management and taxation advisory. The firm is very fair in its dealings & delivers unmatched customer service and consistent support to the clients. At DNS, we are constantly in touch with our clients. DNS Accountants are the best for tax credit support as:
DNS Accountants offers taxation & accounting services to individuals and owner managed businesses. Our learned team of CAs / ACA and tax accountants helps clients with services ranging from bookkeeping to payroll to tax planning, and filing tax returns. DNS Accountants help clients focus on maximizing their wealth.
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