On the 22nd October 2021, the Low Pay Commission recommended to the Government, an increase in the National Living Wage.  These recommendations have been accepted by the Government and will come into force on 1st April 2022.

The National Living Wage applies to all working people over the age of 23, and there are different bands for young people and apprentices.

The new rates are as follows:

National Living Wage £9.50 6.6%
21-22 year olds £9.18 9.8%
18-20 year olds £6.83 4.1%
16-17 year olds £4.81 4.1%
Apprentices £4.81 11.9%
Accommodation offset £8.70 4.1%

The rise in the National Living Wage comes after the Covid-19 pandemic, when the Government supported businesses through the furlough scheme.  Since the pandemic, the labour market has recovered strongly and the economy is expected to continue to grow over the next 12 months.

The increase (59p in real terms), will support the wages and living standards of the lowest paid workers in the UK at a time when the economy is seeing a robust pay growth across all industry sectors.

The Commission states that this increase comes against a backdrop of strong GDP forecasts with employment getting back to levels that were seen pre-pandemic.  Also, businesses are advertising a record number of vacancies.

It is expected that the increase will put more money in the pockets of the lowest paid members of our society – that of care-workers, food distributors and many other low paid groups.

The commission believes that it will have a very positive impact on communities also – Blackpool, for instance anticipate a benefit of around £6.1million for pay increases to its low paid workforce.

The accommodation offset amount is an allowable deduction for the wages of the low paid for any accommodation they may use.  This is deducted for any day of the week that they use the accommodation.

The Low Pay Commission is an independent body made up of a collection of employers, experts and trade unions and their role is to advise the Government and make recommendations.

The Low Pay Commission is different from the UK Living Wage and the London Living Wage.  The latter are both pay benchmarks that employers voluntarily sign up to in an attempt to measure the needs of the workers, whereas the National Living Wage is based on a target relationship between its level and average pay.

The UK Living Wage and the London Living Wage are calculated by the Living Wage Foundation and applies to workers aged 18 and over, whereas the Low Pay Commission has no role in the UK Living Wage or the London Living Wage and applies to workers aged 23 and over.

If you require any further information regarding the Low Pay Commissions recommendations to the Government, you can take a look at the Government website here.

The full report and recommendations are full and varied and cover topics such as the economic context, business conditions, geography of jobs recovery, pay growth for low paid works, the labour market for young people, live in domestic workers including au pairs and apprentices.  If you want to find out more, check out the full report here.

We are Makinson and Co – certified chartered accountants serving business and personal clients in and around The Forest of Dean.  We help clients with VAT, taxation, business and payroll services.

If you’re looking for an accountant to give you advice about running your business more efficiently, or if you need some help with payroll services in-line with the new Low Pay Commissions recommendations, then take a look at our website www.makinsonandco.uk or give us a call on 01594 842 188.