Minimum wage, SSP, parental pay and income tax thresholds to change from April 2018

6 March 2018

Minimum wage rate increases

As part of a number of changes to the rates and thresholds for employers, the national minimum wage rates and apprenticeship rates will change on 1 April 2018. The changes are as follows:

  • The National Living Wage, which covers workers 25 and over, will increase from £7.50 an hour to £7.83 an hour.
  • The rate for 21 to 24-year-olds will increase from £7.05 an hour to £7.38 an hour.
  • The rate for 18 to 20-year-olds will increase from to £5.60 an hour to £5.90 an hour.
  • The rate for those aged 16 and 17 will increase from £4.05 an hour to £4.20 an hour.
  • The Apprentice Minimum Wage will increase from £3.50 an hour to £3.70 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. All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

As well as being publicly named and shamed, those that fail to pay their workers the National Minimum Wage could be fined 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 also risk being 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 6 April 2018.

  • Statutory maternity pay (SMP), paternity and adoption pay is increasing from £140.98 to £145.18 (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 £89.35 to £92.05. This increase will also occur on 6 April 2018. You can calculate employee SSP here.

Income tax threshold raised

The main tax-free personal allowance will be increased from £11,500 to £11,850 on 6 April (there are different rates for Scotland) Here you can view the full tax and tax credit rates and thresholds for 2018-19.

Do you use 'self-employed' people? Keep updated...

Members using 'self-employed' people are advised to keep updated on recent developments in employment law such as the Pimlico Plumbers case. The Supreme Court is considering an appeal brought by the company and its company’s chief executive Charlie Mullins over whether Gary Smith, who worked for Pimlico Plumbers between 2005 and 2011, was self-employed, as the company claims, or a worker.

The ruling is likely to have far-reaching consequences for others currently considered self-employed and affect their rights to receive minimum wage and holiday pay. BWF will be providing further guidance in due course.

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.

Not a BWF member and thinking of becoming part of the British Woodworking Federation? Use this quick response form to provide us with some contact details so we can get you signed up!

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