National Minimum and Living Wage increases 1 April 2021
The new National Minimum Wage (NMW) and National Living Wage (NLW) rates came into effect on 1 April 2021. The new rate for the NLW is £8.91 which is a 19p increase over last year. The NLW is the minimum hourly rate that must be paid to those aged 23 or over. The NLW used to apply only to those aged 25 and over but from 1 April 2021 has been extended to 23 and 24 year olds for the first time. The threshold is expected to further reduce to 21 by 2024. The increase represents an additional £345 per year for someone working full-time and earning the NLW.
The hourly rate of the NMW (for 21-22 year olds) increased to £8.36 (a rise of 16p). The rates for 18-20 year olds increased to £6.56 (a rise of 11p) and the rate for workers above the school leaving age but under 18 increased to £4.62 (a rise of 7p). The NMW rate for apprentices increased by 15p to £4.30.
It is important that you ensure that you have adopted the new rates as there are significant penalties for employers who are found to have paid workers less that they are entitled to by law.
If you have underpaid an employee, you must pay any arrears immediately. There are penalties for non-payment of up to 200% of the amount owed unless the arrears are paid within 14 days. The maximum fine for non-payment can be up to £20,000 per employee and employers who fail to pay face up to a 15-year ban from being a company director as well as being publicly named and shamed.
Newsletter
With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!
Latest news
- Transfer pricing consultation
17/07/2025 - More...
New UK transfer pricing rules could mean more reporting and fewer exemptions for mid-sized businesses. The government is
- Higher penalties for MTD filers
17/07/2025 - More...
Making Tax Digital for Income Tax will become mandatory in phases from April 2026. If you are self-employed or a
- Helping family or friends with their tax
17/07/2025 - More...
Need to help a relative or friend with tax? HMRC’s Trusted Helper service makes it quick and easy to support someone