April 2021 – National Minimum Wage 2021 & Other Changes

Our overview will give you all the required information you need, including info about the national minimum wage 2021 increase, but we are always on hand to assist if you require any further assistance!

1 April 2021 – The National Minimum Wage rise will take effect

The new National Living Wage will increase by 2.2% from £8.72 to £8.91 per hour for anybody at the age of 23 and over. For employees aged 21 and 22 the rate will go up to £8.36, 18 to 20 year old employees see their hourly rate increase to £6.56, while the under 18’s will receive £4.62. And not to forget about apprentices, whose pay will increase to £4.30 per hour.

4 April 2021 – Weekly Statutory Family-Related Pay will increase

The weekly rate of statutory family-related pay will increase by 77p per week, rising from £151.20 per week to £151.97 per week, (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate. More info is available here

The following are classified as family-related payments and benefits:

  • Statutory Maternity Pay
  • Statutory Adoption Pay
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Parental Bereavement Pay; this follows the introduction of the right to parental bereavement leave, available to the parents of a child who died on or after 6 April 2020
  • Maternity Allowance

To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit of £120 per week.

6 April 2021 – Weekly Statutory Sick Pay Rate will increase

Following the family-related pay increase, the Statutory Sick Pay (SSP) rate is also set to rise from £95.85 to £96.35 per week.

To qualify for Statutory Sick Pay (SSP) you must:

  • be classed as an employee, who has done work for your employer
  • earn an average of at least £120 per week
  • have been ill, self-isolating or ‘shielding’ for at least 4 days in a row (including non-working days)

Agency workers are also entitled to receive SSP.

Further changes happening in April 21, such as:

The reform to intermediaries legislation (IR35) will be extended to private sector

This reform has been delayed from 06 April 2020, but it now means that the public sector off-payroll working rules (IR35) will be extended to the private sector from the 6th April this year. Large and medium-sized private companies will be required to follow the IR35 rules, meaning a company will be responsible for assessing the employment status of their contractors.

HMRC will be given power to recover tax from parties other than employers in off-payroll working arrangements

This amendment means that where an employer has not deducted income tax under PAYE from payments made to an off-payroll worker, HMRC can now recover the tax from other parties within the labour supply chain, for example the contractor’s agency or from the client for whom the work has been done for.

The lower earnings limit for national insurance contributions has been frozen and won’t change

This means that the lower earnings limit (LEL) will remain at the 2020/21 tax year rate of £120 per week.  Even if an employee earns more than the LEL, he is not required to pay primary, class one national insurance contributions until his earnings reach the primary threshold.

The State Pension rate will increase

State Pension payments will increase by 2.5% from 12th April 2021, the Department for Work and Pensions (DWP) has recently confirmed. The increase means that those on the full, new State Pension will receive £179.60 per week, an increase of £4.40 on the current rate of £175.20.

In addition, any pension on the old basic State Pension, will be receiving £137.65 instead of £134.25 per week, an increase of £3.40.

The annual rise is a result of the ‘triple lock’ ruling, which is a safeguard that currently ensures State Pension does not lose value because of inflation.