National minimum wage rates rise from 1 October
Employers are reminded that new national minimum wage rates (NMW) will come into force from 1 October. The new rates are:
- £5.93 an hour to workers aged 21 and above (the main rate)
- £4.92 an hour to workers aged 18-20
- £3.64 an hour to workers aged below 18 who are no longer of compulsory school age
Changes to the NMW from 1 October 2010 include a reduction in the age threshold for the main rate from 22 to 21.
For the first time, a NMW rate also applies to apprentices. Apprentices under the age of 19 or apprentices over the age of 19 in the first year of their apprenticeship must be paid at least £2.50 an hour.
Employers who provide living accommodation for employees are able to offset the NMW by £4.61 for each day that accommodation is provided.
Links: National minimum wage – the basics
The Low Pay Commission is carrying out consultation to help it make recommendations for NMW rates from October 2011.
The commission is seeking feedback on questions including how firms are coping with the minimum wage as the economy emerges from the recession and how the NMW affects the competitiveness of small firms.
Links: Low Pay Commission consultation letter
From 1 January 2011, employers will need to ensure that they pay workers the NMW in addition to payments for travel to a temporary workplace.
The move follows consultation earlier in the year and is designed to prevent what the government describes as “potentially exploitative arrangements” affecting some temporary workers paid at or near NMW.
Many temporary workers take part in travel and subsistence schemes operated by certain types of business that take advantage of tax relief on travel from home to a temporary workplace, by agreeing that some of the pay that would be subject to tax and national insurance contributions (NIC) is replaced with expenses payments, which provide tax and NIC savings.
In its consultation paper, the government says that such arrangements can adversely affect NMW workers access earnings-related contributory benefits and that travel and subsistence schemes seen by HM Revenue & Customs leave them only slightly better off in terms of take home pay. It also says that in some schemes, it is the business employing the workers who enjoy the greatest financial benefit.
Links: Travel and subsistence expenses consultation
To find out more about how we can help you, please contact Simon Coles & Co, London Chartered Accountants.
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