Minimum wage, SSP, parental pay and income tax thresholds to change from April 2017

23 March 2017

Minimum wage rates increase

As part of a number of changes to the rates and thresholds for employers, the national minimum wage rates and apprenticeship rates will change in April 2017. The current rates are as follows:

- The National Living Wage, which covers workers 25 and over, will increase from £7.20 an hour to £7.50 an hour.

- The rate for 21 to 24-year-olds will increase from £6.95 an hour to £7.05 an hour.

- The rate for 18 to 20-year-olds will increase from to £5.55 an hour to £5.60 an hour.

- The rate for those aged 16 and 17 will increase from £4.00 an hour to £4.05 an hour.

- The Apprentice Minimum Wage will increase from £3.40 an hour to £3.50 an hour. This covers apprentices who are under 19, or 19 and over and in the first year of their apprenticeship.

There are a number of people who are not entitled to the NMW/NLW. These are self-employed people, volunteers or voluntary workers, company directors, family members, or people who live in the family home of the employer who undertake household tasks. Members using 'self-employed' people are advised to keep updated on recent developments in employment law such as the Pimlico Plumbers case and Uber drivers winning the right to be classified as workers rather than self-employed, thus affecting their rights to receive minimum wage and holiday pay. BWF is working with Build UK to provide further guidance.

All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW. A series of measures have recently been introduced to crack down on employers that break National Minimum Wage law. As well as being publicly named and shamed, those that fail to pay their workers the National Minimum Wage also face heavy new financial penalties. With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

Maternity, Paternity and SSP increases

The statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay and sick pay are also set to increase from April 2017.

Statutory maternity pay (SMP), paternity and adoption pay is increasing from £139.58 to £140.98 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate).

You can use the government’s maternity and paternity calculator for employers to calculate an employee’s Statutory maternity pay (SMP), paternity or adoption pay, their qualifying week, average weekly earnings and leave period.

The rate of statutory sick pay (SSP) is also increasing from £88.45 to £89.35. This increase is expected to occur on 6 April 2017.

To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit which is increasing from £112 to £113 in April 2017.

Income tax threshold raised

The income tax threshold will be raised by £500 in April, to £11,500 and employee perks such as salary sacrifice schemes are to be scaled back, albeit with some exceptions such as cycling schemes. Here you can view the tax and tax credit rates and thresholds for 2017-18.

Immigration Skills Charges

As part of a set of changes to immigration rules including the raising of minimum salary thresholds, the government is set to introduce an Immigration Skills Charge which will be paid by UK employers who recruit skilled workers from outside the European Economic Area (EEA) through the Tier 2 (General) and Tier 2 (Intra-company Transfer) routes. There will be a flat rate of £1,000 per Tier 2 migrant sponsored per year and a reduced rate of £364 per migrant per year for small or charitable sponsors. With the changes expected on 6 April 2017, customer guidance will become available on

Duty to report on Payment Practices

Regulations for large companies and limited liability partnerships (LLPs) to publish their payment practices and performance twice a year will take effect in April 2017 and will apply to businesses for financial years starting on, or after, 6 April 2017. View the final guidance.

The BWF’s employment, legal and tax guidance is one of the most developed areas of our support for woodworking companies. BWF members needing advice on tax and employment matters can use our free-to-members business support helplines which includes legal assistance from Wedlake Bell, and employment advice from Croner. They can find further resources in this area under publications, where we have a number of guides and template documents. Look out for the release of our new employment guides and draft policies.

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