The latest wage increases came into force on 1 April 2025 – are your payroll systems prepared? If you employ staff, reviewing your pay practices is now more crucial than ever.
New minimum rates in effect
The National Living Wage now extends to workers aged 21 and over, rising to £12.21 per hour.
Meanwhile, younger employees have seen sharp increases in the National Minimum Wage:
- 18–20 year olds: £10.00 per hour (previously £8.60)
- 16–17 year olds and first-year apprentices: £7.55 per hour (previously £6.40)
Apprentices aged 19 or older who have completed their first year must be paid the NMW applicable to their age bracket.
Minimum wage laws: zero tolerance for errors
All employers must meet their legal wage obligations. If you fall short:
- Arrears must be paid in full
- HMRC may impose fines of up to 200 per cent of unpaid amounts (capped at £20,000 per worker)
- Offending businesses may be publicly named by the Government
- Criminal proceedings and surprise inspections are also possible
How to ensure you’re paying correctly
Employers must pay at least the legal minimum for every hour worked within each worker’s pay reference period, usually weekly or monthly.
It’s important to factor in actual hours worked, not just hours scheduled.
Risk points to watch include:
- Employees reaching a new age threshold for higher pay
- Apprentices transitioning out of the lower rate
- Workers with performance-based or irregular pay
- Deductions that may dip net pay below the legal minimum
You can use HMRC’s official calculator to double-check your rates.
Accurate records are your best defence
You must be able to prove you’ve complied. Keep records that cover:
- Total pay (including any additions or deductions)
- Hours worked
- Terms of employment
- Justifications for wage exclusions
Records created on or after 1 April 2021 must be kept for at least six years. They can be digital or paper-based but must be accessible and well-organised.
We’re here to help
If you’re unsure whether your payroll remains fully compliant, don’t take any chances. We can provide a full audit and help you fix any issues before they result in penalties.