If you work in the hospitality, retail or care industries and have struggled with staffing and retention due to having to pay staff a low minimum and living wage, this article is for you.
The government aims to reverse this trend by increasing the National Living Wage by 6.2% for workers over the age of 25 – the largest raise in two decades. Read our blog to find out when the new National Living Wage goes into effect and what it means for small businesses and those under 25. Contact Thobani Accountants with any questions today.
When Does the National Living Wage Go into Effect?
As of April 1, 2020, the National Living Wage will increase from £8.21 to £8.72 an hour. Currently, 2.8 million full-time workers live off the National Living Wage, which means families will now take home an extra £930 a year thanks to the new increase. Below is a chart which details the change in National Living Wage, so you know exactly where you fall on the scale.
Increase to National Living Wage
| Age | Current Rate | Rate as of April 2020 |
| 25 and up | £8.21 | £8.72 |
Increase to National Minimum Wage
| Age | Current Rate | Rate as of April 2020 |
| 21 to 24 | £7.70 | £8.20 |
| 18 to 20 | £6.15 | £6.45 |
| 18 and under | £4.35 | £4.55 |
| Apprentice | £3.90 | £4.15 |
To give you context on how far the National Living Wage has come since its inception in 2016, the lowest wage gap has experienced a £3,600 increase in wages.
How Does the National Living Wage Affect Small Businesses?
Not everyone is happy with the new National Living Wage, especially small businesses that’ll suffer from high wages. Small businesses fear that they won’t be able to pay the high wages of their staff and invest in their own business’ future and growth. In fact, many business owners don’t want the National Living Wage to rise rapidly because their overhead costs will increase and their margins will decrease. Despite this cause for concern, the government aims to increase the new National Living Wage to £10.50 an hour over the next five years to help roughly 4 million people make ends meet.
Only time will tell what’s in store for the National Living Wage, so contact Thobani Accountants for help with your tax planning today. Book a free, no-obligation consultation to see how you can secure your wealth and plan for the future today.
