Employees Pay Review
As a new financial year approaches, business owners will take the opportunity to employees’ pay review. Unfortunately, COVID-19 has made this a much harder decision than usual. The Treasury has announced the next increase in minimum wage for apprentices will next April, with the rate going up from £4.15 to £4.30 an hour. This is the second raise in as many years, with the £4.15 rate only set in 2020. Before this, the last increase was from £3.70 to £3.90, back in the 2018 Budget. An increase in the wage helps to ensure potential apprentices are kept interested and drawn to the scheme. It may help more young people consider apprenticeships after finishing school.
Change in national minimum wage for apprentices comes alongside increases for all other age groups too. For 21 to 22-year-olds, it increases to £8.22 an hour. For 18 to 20-year olds, it will increase to £6.56 an hour . For 16-17 year olds, it will increase to £4.62 an hour. National living wage for everyone aged over 23 has also increased from £8.72 to £8.91. These increases will all take place at the beginning of the new financial year in April 2021.
Apprenticeships work for business
Chancellor Rishi Sunak has also confirmed in his most recent spending review statement. The government will “improve the way the apprenticeship system works for business”. The first step in this process is the extension of the cash bonus scheme for hiring apprentices. Which will now in place until March 2021, rather than ending in January.
Worrying figures from the Department of Education shows that Coronavirus has negatively impacted apprentices. Like most other areas of work and business. So it is especially welcome that the government as looking for ways to help employers bring new apprentices into their firms.
It is impossible to ignore the damage Coronavirus has done the economy and the jobs market. There are many young people looking for their dream job or a chance to try out a career area. They are interest in finding out more. Apprentices are keen to learn and develop, making them loyal employees and a great investment for the future.
Combination of incentives for employers and the wage increases for the apprentices themselves. It should be a step towards increasing apprenticeship uptake. As this happens, more employers will realise just how valuable apprentices can be. How businesses can benefit from fresh talent as well as employees. Who are completely versed in your business’ way of working for the future.
National Insurance contributions
The primary threshold for class 1 National Insurance (NI) contributions will change from £9,500 to £9,568 per year in 2021/22.
Secondary threshold is rising to £8,840, and the upper earnings limit is changing to £50,270.
Meanwhile, the lower earnings limit is set to stay the same at £6,240 per year.
Student loans
From 6 April 2021, the thresholds for repaying student loans will increase to £19,895 for those on plan one, and £27,295 for plan two.
Meanwhile, the postgraduate loan threshold will stay the same at £21,000.
If an employee’s pay exceeds the threshold for their student loan plan. You will need to make the correct deductions from their pay and report this to HMRC.
Workplace pension contributions
The rules for auto-enrolment are staying largely the same in 2021/22.
Employees who earn more than £10,000 a year and are aged between 22 and state pension age must be automatically enrolled into a workplace pension scheme.
Minimum contribution rates are staying the same, too, with employers required to pay at least 3% of the employee’s qualifying earnings into the pension. The combined minimum contribution between the employer and employee will remain at 8%.
For more information about the apprenticeship incentives and how to hire apprentices for your company, get in touch with us today.
