Employers need to be ready for April – both the national living wage and the national minimum wage rates are to increase.
“The rise in wages affects employers’ finances and processes,” explains Felicity Reader, Accounts Senior at Stevenage’s re:accounts Chartered Accountants. “Businesses should prepare for any cashflow impact and update their payroll system to reflect the new amounts involved.”
April 2024 heralds the start of three changes for employers:
1. Increases to the National Living Wage (NLW) include a 12.4% increase for workers aged 21 and 22. This aligns them with those aged over 23 as these workers are also due to receive £11.44 per hour (an increase of 9.8%). Eligibility will also be extended by reducing the age threshold to 21-year-olds for the first time.
2. National Minimum Wage (NMW)applies to those aged 20 and under. This increases to £8.60 per hour (aged 18 – 20) and £6.40 per hour for the under-18s. The apprentice rate also increases to £6.40 per hour.
3. National Insurance Contributions (NIC) decreases:
- Class 2 contributions are to be abolished from April 2024. This is expected to save £192pa for self-employed workers.
- Class 4 NIC rate is due to decrease by 1% to 8% for profits over £12,570. This applies from April 2024.
These NIC changes follow the cut in Class 1 employee NICs: from 12% to 10% for workers earning over £12,570. This started on 6 January this year, providing an additional £450 per year to people earning the average UK salary of £35,400.
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