Another tax year began in April, with new National Minimum Wage rates. The minimum pension contributions remain the same, though there is a slight increase in the lower threshold for qualifying earnings (see below).
NB: The minimum wage increases do not apply to employees while they are furloughed due to Coronavirus. Their furlough wages should be based on the last pay period before 17 March 2020. Please contact us for more information on furloughing employees.
What’s the minimum wage?
The hourly minimum wage rates from 1 April 2020 are below (with the previous year’s rates shown in brackets). You must be at least school leaving age to qualify for them.
- 25 and over: £8.72 (up from £8.21)
- 21 to 24: £8.20 (up from £7.70)
- 18 to 20: £6.45 (up from £6.15)
- Under 18: £4.55 (up from £4.35)
- Apprentice: £4.15 (up from £3.90)
The apprentice rate is for apprentices aged 16 to 18, and apprentices aged 19 or over who are in the first year of their apprenticeship. All other apprentices are entitled to the National Minimum Wage for their age.
Internships and work experience
The rules regarding the minimum wage for interns and people on work experience vary depending on the situation. If you’re thinking of employing someone on this basis, it’s best to check out HMRC’s guide on the minimum wage for work experience and internships.
What are the minimum pension contribution rates?
The minimum pension contribution rates remain 3% of qualifying earnings for the employer and 5% for the employee.
The Department for Work and Pensions’ lower qualifying earnings threshold is expected to increase from £118 to £120 from 6 April 2020. This means that qualifying earnings will be an employee’s gross pay between £120 per week and £962 per week. For an employee who’s paid monthly, it’s their gross monthly pay between £520 and £4,167.
An employee earns £300 per week (gross).
Her qualifying earnings are £180 (£300 – £120).
Min contribution from the employee: £9 per week (5% of £180).
Min contribution from the employer: £5.40 per week (3% of £180).
Total minimum contribution: £14.40 per week (£9 + £5.40).
NB The new tax year starts on 6 April, but if you pay your employees monthly you should use the new pension rates for the whole month of April.
See our blog on pensions to find out everything you need to know about enrolling employees into a workplace pension scheme.
If you have any questions about pension rates or the minimum wage, you know where to find us!