Whats the difference between National Living Wage (NLM) and National Minimum Wage (NMW)? A Glasgow accountant from The Kelvin Partnership will make sure you are aware of your varying payroll duties as a small business owner.
As we mentioned in our last post the start of April brings a new tax year and updated rates of pay. But, what is National Living Wage? Our experienced, highly qualified accountants will guide you through all you need to know about matters of payroll.
Updates to Payroll Duties – News from The Kelvin Partnership
What is National Living Wage?
The National Living Wage was initially introduced in 2015 by the then-Chancellor George Osbourne and eventually came in to practice in the next tax year in April 2016. It is the law that anyone over 25 and not in the first year of an apprenticeship has to be paid £8.21 an hour – this is the current National Living Wage. If you employ workers under the age of 25, you don’t have to legally pay them National Living Wage, only National Minimum Wage.
What is the National Minimum Wage?
The National Minimum Wage is an amount which varies by age, this is the amount you are legally required to pay workers. Take a look at this post for more information.
National Living Wage vs National Minimum Wage
Therefore, the difference between NLW and NMW is lies with age. If you employ someone who is over 25 you have to pay them National Living Wage, if you employ someone under the age of 25 you have to pay them the correct rate of National Minimum Wage.
Consequences of Underpaying Employees
It is against the law to pay employees less than NMW and NLW, there is a fine for underpaying an employee and this can be up to £20,000. If you then fail to pay the fines for underpayment to an employee, you could face up 15 years in jail.
Failure to pay employees correctly is very serious and you should do everything you can as a small business owner to ensure you are paying workers correctly! A payroll accountant from The Kelvin Partnership will be able to guide you through all you need to know about payroll duties.