Over the last few weeks, I’ve mentioned a few tax changes that are coming in April, as announced by Rachel from Accounts in last year’s budget.
And, this week, I thought I’d focus on the increase in minimum wage and the fact that it impacts a lot of businesses who don’t think of themselves as “minimum wage” employers.
You’ve probably seen a lot in the press recently about large retail and restaurant chains looking to close branches and cut jobs, prompted by the increase in Employers National Insurance and minimum wage. (Or being poor at football in Man Utd’s case.)
But it’s not just retail, restaurants or other hourly paid jobs that will be hit – a lot of businesses paying salaries will be affected as minimum wage is probably higher than you think.
The National Living Wage (NLW) for people aged 21 and over is going up in April from £11.44 to £12.21 per hour. This is the minimum rate you can legally pay someone.
But what does this mean as an annual salary?
Someone earning NLW working 40 hours per week is currently on an annual salary of £23,795. From April, the salary will be £25,397.
And those are higher figures than many people realise, so this affects a lot more businesses than it first seems.
What’s the cost to a business?
When you take into account Employers NI and Employers Pension contributions, the total cost of employing this person rises from £26,350 now to £29,032 in April. That’s an increase of £2,682 per annum, or 11%, in cost to you!
Therefore, if you do have people on minimum wage, you need to be aware of this and plan for the increase.
We all want our team members to be paid fairly and to get a proper wage. As business owners, it’s for us to ensure that our pricing and our business can deliver that without harming our profits.
So, if you are worried about the impact of minimum wage or Employers NI on your team and your profits, please do give us a shout.
We can look at the impact on your business and help you find ways to manage it – for example, by looking at your pricing, your products, or the way you deliver your service to ensure you keep your profits where they need to be.
If you have any questions, please email su*****@*********************co.uk or give us a ring on 0151 380 8084.
Many thanks
Jon