Changes to Minimum and Living Wages, and the new Apprenticeship Levy
With effect from 1 April 2017:
The National Living Wage for those aged 25 and over will increase from £7.20 to £7.50 per hour.
The National Minimum Wage will also increase as follows:
Apprentices aged 16-18 or over 18 in their first year: from £3.40 to £3.50 per hour
16-17 year olds: from £4.00 to £4.05 per hour
18-20 year olds: from £5.55 to £5.60 per hour
21-24 year olds: from £6.95 to £7.05 per hour
With effect from 6 April 2017 a new Apprenticeship Levy is being introduced. This will be charged at 0.5% of the employer’s total pay bill but there will be an offset of £15,000 so only employers with an annual pay bill in excess of £3 million will need to pay anything. There are the usual rules for connected companies and the levy will be collected on a monthly basis through PAYE. This will cause problems if bonuses are paid early in the tax year. For example, if the total pay bill in month 1 is (say) £300,000 (because of bonus payments), a levy of £250 will be payable. If the total pay bill for month 2 drops back to £200,000 or less, the £250 will be repaid in month 2!