Nmw from april 2024 – make sure you comply
From April 2024, the National Living Wage (NLW) and associated minimum wage rates have increased once again. If you employ staff—whether full-time, part-time or casual workers—you need to ensure your payroll is compliant with these new thresholds. We’ve put together this guide to help you understand what’s changed and what you need to do.
The Office for National Statistics and the Low Pay Commission review minimum wage rates annually, with changes typically taking effect in April. For the 2024/25 tax year, these increases are significant in some cases, and getting them wrong can result in penalties from HMRC. Let’s break down the new rates and explore how to stay compliant.
What Are the New Rates from April 2024?
The National Living Wage for workers aged 21 and over has risen to £11.44 per hour. This is the headline rate that most employers will be paying attention to, and it represents a meaningful increase from the previous year’s £10.42.
For younger workers and apprentices, the rates are:
- 21–22 year-olds: £8.60 per hour
- Under 21s: £5.28 per hour
- Apprentices (first year or under 19): £5.28 per hour
If you’ve got a mixed-age workforce, it’s crucial to apply the correct rate to each employee. A common mistake is overpaying younger staff at the NLW rate when they should be on a lower threshold—which wastes money. Equally, underpaying anyone is a compliance issue that HMRC takes seriously.
Why Compliance Matters
HMRC actively investigates minimum wage breaches, particularly for larger employers. If you’re found to have underpaid staff, you’ll face back pay claims, interest and potential penalties of up to 200% of the arrears owed. For smaller firms, this can be devastating.
Beyond the financial risk, there’s the reputational angle. Workers talk, and word spreads quickly if staff feel they’re not being paid fairly. You might also face enforcement action from the Gangmasters and Labour Abuse Authority (GLAA) if you’re in certain high-risk sectors.
The good news? If you get it right from the start of the tax year, you’ll have nothing to worry about.
Updating Your Payroll
Action point one: Review your payroll software. Most modern systems—whether you use Sage, Xero, FreeAgent or cloud-based packages—will have updated their minimum wage tables by now. Log in and check that the April 2024 rates are loaded correctly.
Action point two: Audit your current payroll. Pull a report of what you’re paying each employee and cross-reference it against their age and the new thresholds. If anyone is below the minimum for their age group, you’ll need to increase their pay immediately and calculate any arrears owed.
Action point three: Check your overtime and bonus structures. The minimum wage applies to gross pay (before tax), but it’s calculated on an average hourly basis. If you pay bonuses, piece rates or commission, make sure the average works out at or above the minimum across the pay period.
Action point four: Document your compliance. Keep records showing when you updated rates, who was affected and any back pay adjustments. This evidence will protect you if HMRC ever comes calling.
Don’t Forget About Apprentice Rates
If you employ apprentices, remember that the apprentice rate applies to first-year apprentices or those under 19 years old. Once an apprentice moves into year two and is 19 or older, they should move onto the appropriate adult rate—either the 21–22 year-old rate or the NLW if they’re 21+.
It’s easy to “forget” to update an apprentice’s pay when they turn 19, so flag this in your calendar or payroll system.
Keeping Up to Date
Minimum wage rates change annually, so make a note in your diary now for early April 2025. The Low Pay Commission publishes recommendations in late March, and HMRC confirms the new rates shortly after. By staying ahead of the curve, you’ll avoid last-minute scrambling.
In Summary
The April 2024 minimum wage increases are now in effect. Review your payroll immediately, ensure all employees are paid at or above their relevant threshold, and document your compliance. If you’ve underpaid anyone, act quickly to put it right.
For tailored advice on minimum wage compliance, payroll setup or back pay calculations, contact Severn Accounting—we’re here to help.