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National Minimum Wage to Increase in 2022

National Minimum Wage Increases for 2022

The Government has announced the National Minimum Wage (NMW) increases for next year. The top band, known as the National Living Wage, will increase from £8.91 to £9.50 per hour from April 2022. This band applies to those aged 23 and over and is an increase of 6.6 per cent, after Ministers accepted the Low Pay Commission’s recommendation.

The other bands of the National Minimum Wage are also set to increase from 1st April next year

  • National Living Wage (for adults aged 23 or over): £9.50 per hour
  • Adult rate for workers aged 21 to 22 (except where the apprenticeship rate applies): £9.18
  • Development rate, for workers aged between 18 and 20 inclusive (except where the apprenticeship rate applies): £6.83
  • Young workers rate, for workers aged under 18 but above the compulsory school age and who are not apprentices: £4.81
  • Apprenticeship rate, for apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship: £4.81

Chancellor Rishi Sunak said that the increase, “ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this parliament.”

Prior to the budget announcements, Prime Minister Boris Johnson stated at the Conservatory Party Conference that he wants the country to move “towards a high-wage, high-skill, high productivity and low tax economy”.

What do the changes mean?

The increases to the National Living Wage represents an approximate increase of £1,074 per full-time worker before tax. For workers aged 21-22 years old, there will be a 9.8 per cent increase on the current rate, rising to £9.18.

Campaign group, The Living Wage Foundation, have welcomed the increases, but said there was still a “substantial gap” between the new wages and its own calculations of a “real living wage” based on living costs.

Recent research by Investing Reviews explored the least affordable cities in the UK for workers aged over 23 and on the current minimum wage. By comparing the cost of renting and average living costs, it found that there was a considerable shortfall for workers paid the current minimum wage.

Planning for the increase

While the increase has been welcomed by workers, the rise in wages could place a strain on small- to medium-sized business, who will also be impacted by the increase in National Insurance contributions.

National Insurance Contributions (NICs) paid by both employed and self-employed workers will rise by 1.25% from April 2022 with the intention of helping to fund the health and social care sector.

Further information

Find out more information about the National Minimum Wage and how it might affect your business.

If you would like support with your payroll needs, or guidance on your staffing requirements, please call HR Solutions on 0844 3245840 or find out more.

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