National minimum wage ― overview

Produced by Tolley
  • (Updated for Autumn Budget 2021)

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • National minimum wage ― overview
  • Eligibility
  • Minimum hourly rates
  • National living wage
  • Apprentices
  • The accommodation offset
  • Checking pay against the minimum
  • Claiming the shortfall in pay
  • HMRC actions
  • Employer actions
  • More...

National minimum wage ― overview

Statute provides that almost all adult workers should be paid at a minimum hourly rate ― either the national living wage (NLW) or the national minimum wage (NMW) (according to the age of the worker and whether he is an apprentice). Unless otherwise stated, all references to the NMW inthis guidance note should be read as including the NLW.

At Spring Budget 2020, the Government announced that it is committed to helping with the living cost for everyone across the UK and will announce a new target for the NLW to help reach two-thirds of median earnings. The NLW will be extended to workers aged 21 and over by 2024. Provided that economic conditions allow it, this means that NLW is expected to be over £10.50 in2024.

Eligibility

Most workers who work inthe UK are entitled to be paid the minimum wage. This is a very broad category of people and includes all those who personally provide work or services under a contract, except for those who are self-employed and inspecified excepted groups including:

Office holders (unless the terms of their contract specifically make them workers)NMWA 1998, s 54(3)
Serving members of the armed forces, including reservistsNMWA 1998, s 37
Share fishermen who do not receive wagesNMWA 1998, s 43
Voluntary workers employed by a charity or voluntary organisation who do not receive expenses or benefits other than subsistence or accommodation. Do note that volunteers receiving other benefits or expenses, eg use of cars or travel allowances, are not inthis categoryNMWA 1998, s 44
Prisoners or those detained inremoval centresNMWA 1998, ss 45, 45B
Those providing unpaid work inorder to discharge a fineNMWA 1998, s 45A
Resident members of religious and other similar communities that are charitiesNMWA 1998, s 44A
Those participating ingovernment-funded training schemesSI 2015/621, reg 51
Those participating intrial periods of work under a partly or wholly government-made or government-funded scheme to provide

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