In November 2020 the Chancellor announced the new rates for the National Minimum Wage which will take effect from April 2021.

Hourly Pay Rate Increases from 2021

The National Living Wage will be extended from those aged 25+ as it is currently to employees aged 23+.  The rate will increase by 2.2% from £8.72 per hour to £8.91 per hour.

  • Those aged 21 and 22 will receive a 2% rise from £8.20 to £8.36 per hour.
  • 18-20 year olds will receive a 1.7% rise from £6.45 to £6.56 per hour
  • 16-17 year olds will receive a 1.5% rise from £4.55 to £4.62 per hour.
  • Apprentices will receive a 3.6% rise from £4.15 to £4.30 per hour.

The Accommodation Offset will increase from £8.20 to £8.36 per day.

 Claiming Furlough

When you make these changes to your employees' wages from April 2020 you will need to remember that you cannot claim the new rate of pay if your employee is furloughed during April 2021.  The amount you can claim must be based on the pay rate they were receiving when they were originally furloughed during the first lockdown, or the pay rate they were receiving in October when furlough returned on 1st November if that was the first occasion they had been furloughed.

If you are claiming furlough it can make your pay calculation quite complex because you will have to pay any top up for Bank Holidays, holiday or if you are topping up to 100% at their new rate rather than at the rate you are can claim for furlough. 

Outsourcing your PAYE calculations

This is one of those situations where you will find outsourcing your payroll to a company with experience of calculating pay and preparing furlough claims will ensure that you are not paying your staff incorrectly or overclaiming (or even underclaiming) furlough from HMRC.

If calculating your own payroll and furlough claims has gone on for far too long and you need some help contact us now and we can quickly and easily bring you on board so that doing PAYE for your staff is no longer a time-consuming chore.