Personal and family companies – What is the optimal salary for 2021/22?
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22nd April 2021Workers across the country will soon see the benefits of an increased National Living Wage (NLW) from 1 April 2020. Younger workers who receive the National Minimum Wage (NMW) are also seeing boosts. This is in line with the Government’s commitment to raising the NLW to £10.50 per hour by 2024.
What are the changes to the National Minimum Wage?
The rates of pay will rise across all age groups from 1 April 2020, the changes are:
What is the National Living and National Minimum Wages?
The compulsory NLW is the national wage rate that has been set for workers 25 or older and has been around since 1999. Mostly, those that are covered by the NMW and are 25 or older will be covered by the NLW. Including:
How is the NMW calculated?
Payments that must be included in the NMW are:
Payments that should not be included when the NMW is calculated:
Are some people not entitled to the NMW?
Yes, there are several workers who are not entitled to the NMW which include:
Pieceworkers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.
What are the deadlines?
You have until 31 January 2021 to make changes to your 2018/29 tax return, otherwise you will have to contact HMRC. In the letter, you will need to say which tax year you are amending and explain why you think you have paid too much or too little and give amounts.
You have four years from the end of the tax year to claim a refund if you have overpaid.
How can I stay compliant with NLW and NMW obligations?
Regular checks to ensure compliance with NLW/NMW obligations are important, ensure that the following are regularly checked:
The penalty for not paying the NLW can be up to 200% of the amount owed if the outstanding balance is not paid within 14 days, up to a maximum of £20,000 per worker.
Please make sure that you act now and ensure that your business is ready to deal with the increased rates on 1 April 2020.
If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant