When it comes to the topic of a wage increase, the National Living Wage and National Minimum Wage are two terms that continue to bemuse employers and employees alike.
In a nutshell, the National Minimum Wage is the legal entitlement workers should receive, while the National Living Wage is the same thing, but geared towards workers over 25.
And with a National Living Wage increase set to take place in April, reaching £7.50, employers will be required to pay over £500 a year to eligible staff members.
“Economic policy does not exist in a vacuum, and economic growth is a means, not an end in itself. The objective of our economic policy is to support ordinary working families, and to build an economy that works for them,” claimed Hammond.
The chancellor said there is a strong base to go on as real wages have increased for 27 months running. And he noted that the lowest paid experienced a faster wage increase than they have in the past two decades.
Referring to the National Living Wage increase, Hammond continued: “Last year we delivered a pay rise to over a million of the lowest paid through the National Living Wage.
“And next month we take more steps to support working families with the cost of living: The national living wage will rise again to £7.50 in April. That’s over £500 more for a full-time worker than this year, and £1,400 more than when the National Living Wage was introduced.
“The personal allowance will rise for the seventh year in a row to £11,500, and the higher rate threshold to £45,000. A total of 29m people will be better off, with a typical basic rate taxpayer paying £1,000 less than in 2010.”
— HM Treasury (@hmtreasury) March 8, 2017
Iain McCluskey, PwC partner, added his thoughts on the news from the chancellor. “The personal allowance and basic rate band continue their journey to the election manifesto targets of 12,500 and 50,000 respectively, with previously announced rises confirmed,” he said.
“Whilst a rising personal allowance means that most taxpayers earning less than £100,000 will pay less tax, it does not help those workers – like part-time employees – already earning less than the current personal allowance.
“And with national insurance clearly a favourite revenue raiser, there seems no short-term hope of the lower earnings limit for national insurance rising to match the personal allowance any time soon.”