New national minimum and living wage factsheet
Pub Date

A new factsheet has been launched by HMRC entitled "Carrying out a self-review of the National Living Wage and the National Minimum Wage". The factsheet will be issued by HMRC as part of their checks to ensure that employees are being correctly paid the National Living Wage (NLW) and National Minimum Wage (NMW). The factsheet provides employers with instructions on how to self-review their records. The NLW and NMW are the minimum legal amounts that employers must pay their employees.

The size and scope of a self-review will depend on a number of factors such as:

  • the size of the workforce;
  • the number of workers that may not have been paid at least the correct rate of NLW and NMW;
  • changes to the NLW and NMW rates;
  • changes in the contracted hours or pay rates of your workers.

Once a review has been carried out, HMRC must be provided with a written summary highlighting the pertinent details. There are penalties for employers that are found to have underpaid their workers and in some cases there may be criminal prosecutions. However, HMRC will not issue a penalty to employers who fully identify and pay any NLW or NMW arrears as part of the self-review process.

The NLW is currently £7.20 per hour for those aged 25 or over. This represents an increase of 50p over the current NMW rate. The NMW will continue to apply for those aged under 25. The current NMW rates are; apprentices £3.30 per hour, under 18s £3.87 per hour, 18 – 20 £5.30 per hour over 20s £6.70 per hour. The hourly rate of the NMW will increase to £6.95 (a rise of 25p) for adults 21-24 year olds from 1 October 2016 with similar rises in the other NMW bands.