The National Minimum Wage is increasing from 1 April 2023. With the Cost of Living crisis fully apparent, the increase will be welcomed by many.
Below we detail the increases and what they mean for you, your employees and your business.
National Minimum Wage Rate Increase from 1 April 2023
| Category of Worker | Hourly Rate |
| 23 years and above (National Living Wage) | £10.42 |
| 21 to 22 years inclusive | £10.18 |
| 18 to 20 years inclusive | £7.49 |
| 16 to 17 years inclusive | £5.28 |
| Apprentices* | £5.28 |
Apprentices
For all Apprentices over the age of 19 and in the second year of the apprenticeship scheme, the National Minimum Wage for their age will apply.
Current Rates (1 April 2022 to 31 March 2023)
| Category of Worker | Hourly Rate |
| 23 years and above (National Living Wage) | £9.50 |
| 21 to 22 years inclusive | £9.18 |
| 18 to 20 years inclusive | £6.83 |
| 16 to 17 years inclusive | £4.81 |
| Apprentices | £4.81 |
National Insurance Contributions
While the National Minimum Wage has increased, the thresholds for NIC have remained the same. Therefore, employees and employers should expect to see an increase in the amount of NIC paid on earnings above the thresholds.
Detailed in the table below are the Thresholds for NIC:
| Weekly threshold 2023/24 | Monthly threshold 2023/24 | Annual Threshold 2023/24 | |
| Primary threshold | £242 | £1,048 | £12,570 |
| Secondary threshold | £175 | £758 | £9,100 |
Primary threshold
The Primary threshold is the threshold at which employees start paying NIC at 12% on their earnings above the threshold and up to £50,270.
For earnings over £50,270, NIC will be paid at 2%.
Secondary threshold
The Secondary threshold is the threshold at which employers start paying NIC at 13.8% on their employees earnings.
Director Efficient Salary from 1 April 2023
Directors who are currently paid £11,980 per year through their company payroll scheme; will be uplifted to £12,570 per year or equivalent to £1,048 per month.
However, Directors who are currently paid £9,100 per year, will remain paid the same due to tax efficiency.
I’m a Director of my company – Which salary should I be receiving?
If you are a sole director of the company (only appointed director of the company), the efficient salary to be paid from the company is £9,100 per year.
If there is more than one director of the company, the efficient salary to be paid from the company is £12,570 per year.
Companies who have more than one director are eligible to claim Employment Allowance relief to cover the cost of employer NIC which become due on earnings above £9,100, therefore meaning they can be paid more through the company payroll scheme, whilst remaining tax efficient.
Employment Allowance
From 1 April 2023, Employment Allowance will increase to £5,000 per year. Employment Allowance can only be claimed up to £5,000 per year and cannot be carried forward if the full amount is not utilised.
Employment Allowance is a relief which can be claimed by most employers to relieve employers NIC paid on employees earnings.
Sole director companies and companies who exceed an employers NIC bill of over £100k in the previous year, are ineligible to claim the relief.
How we can help you
If you’d like to discuss further any of the above information or find out more about our Payroll Services, call us on 01228 904904 or pop us a message at payroll@seavorchartered.co.uk.
