Pension, Living Wage & Minimum wage uplifts
From 6th April 2018 the minimum contributions for Auto Enrolment (workplace pensions) are increasing. The total minimum contribution is 5% of an employee’s ‘qualifying earnings’ ( between £6032 & £46350 per year at 2018/19 rates). At least 2% has to come from the employer, and an employer can choose to contribute more, and give the employee the option to contribute less, so long as the overall 5% minimum is met. If you process your payroll in house with Sage 50 payroll contact us to find out how to change the rates.
Even if you don’t process payroll in house you should be aware of these changes, as virtually all businesses should now have a workplace pension scheme and the increased contribution will be likely to mean an increase in your staff costs*. There is a further increase to be aware of from 6th April 2019, when contribution minimums will rise to 8% of qualifying earnings, with at least 3% coming from employers, and you should be taking this into account when planning cashflow. *Employees have the option to leave or opt out of the workplace pension scheme, therefore you cannot predict exactly what your cost will be but should be prepared for all employees to remain in the scheme from a planning perspective.
The National Minimum Wage (NMW) & National Living Wage (NLW) are also increasing - from 1st April 2018, not 6th so be aware that you may need to raise your rates BEFORE tax year end depending on your pay date. For employees aged 25 & over the hourly rate will be £7.83, & for 21-24 year olds £7.38. The HMRC website gives details of rates for younger employees and apprentices.