Payroll money

Increased Employer Payments

The start of April marked increases for the compulsory payments applicable to employees with the national minimum wage, the national living wage and the minimum contributions for auto enrolment all changing. But there was a curveball to be aware of…

Auto Enrolment Minimum Contributions Increased on 6th April

With the final staging date for auto enrolment passing in February and over 1 million companies and more than 9 million employees now opted in, the process of increasing the amounts paid into pensions by both employers and employees can begin. From April 6th, the minimum amount employers must pay into workplace pensions goes up to 2% of qualifying earnings, with minimum employee contributions increasing to 3% – making a combined total minimum contribution of 5%. A further increase will take place in April 2019 with employers moving up to 3% and employees 5%, a combined total of 8%.

Estimates suggest that by 2020, up to £17 billion a year will be paid into workplace pensions, helping the Government to move the burden of retirement income from the state to the individual.

National Minimum Wage and National Living Wage Increased on 1st April

In a bid to ensure the income of the lowest paid workers remains somewhere in touch with increasing costs, the national minimum wage and living wage were both increased at the start of April. But almost as a perverse April fool’s joke, the increases became applicable from Sunday April 1st, not at the change of the tax year, when most other income and tax changes typically happen. So don’t get caught out when calculating salaries at the end of April.

For workers aged 25 and over, who are on the National Living Wage, the hourly rate will be 33p more at £7.83. Younger employees aged 21 to 24 will also be paid an additional 33p per hour, making their minimum hourly rate £7.38. The rates for those under 21 years of age rise 30p an hour to £5.90 for 18-20yr olds and 15p an hour to £4.20 for 16 and 17 year olds. Apprentices aged under 19 must be paid a minimum of £3.70 an hour whilst those on apprenticeships and aged 19 or over that have completed their first year will move to the minimum/national wage relevant to their age group.