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Increased NMW rates from April 2020

Newsletter issue - February 2020.

Some three million workers are set to benefit from increases to the National Living Wage (NLW) and minimum wage rates for younger workers from 1 April 2020.

The compulsory NLW is the national rate set for people aged 25 and over. The NLW is enforced by HMRC alongside the national minimum wage (NMW), which they have enforced since its introduction in 1999.

Generally all those who are covered by the NMW, and are 25 years old and over, will be covered by the NLW. These include:

employees;
most workers and agency workers;
casual labourers;
agricultural workers; and
apprentices who are aged 25 and over.

From 1 April 2020, the NLW rate (for 25 and overs) and the NMW rates (for other categories) will increase as follows:

from £8.21 to £8.72 for over 25 year olds;
from £7.70 to £8.20 for 21-24 year olds;
from £6.15 to £6.45 for 18-20 year olds;
from £4.35 to £4.55 for under 18s; and
from £3.90 to £4.15 for apprentices.

The new rates should mean a pay rise of some £930 over the course of the year for a full-time worker on the NLW. Younger workers who receive the National Minimum Wage (NMW) will also see their pay boosted with increases of between 4.6% and 6.5%, dependant on their age, with 21-24 year olds seeing a 6.5% increase from £7.70 to £8.20 an hour.

Employers need to make sure they are ready for the new rates.

For further information, see the guidance Calculating the minimum wage at https://www.gov.uk/government/publications/calculating-the-minimum-wage/calculating-the-minimum-wage.